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What API Data Could Signal for the Crude Oil Market on June 16

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API inventory data

On June 16, 2015, the API (American Petroleum Institute) will publish the weekly crude oil, gasoline, and distillates inventory report. Last week, the API report showed that the crude oil stockpile fell by 6.7 MMbbls (million barrels) for the week ending June 5, 2015. Over the same period, gasoline inventories fell by 3.9 MMbbls. In contrast, the distillates stocks rose by 0.038 MMbbls for the week ending June 5.

The API data release will be followed by the EIA’s (U.S. Energy Information Administration) stockpile report. It’s scheduled to be released on Wednesday, June 17, 2015. Crude oil traders closely watch API data as a precursor to the EIA data.

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Last week, government data showed that oil stocks declined by 6.8 MMbbls to 470.6 MMbbls for the week ending June 5, 2015. The massive decline in the oil inventory was led by the rising demand from US refineries. Market surveys suggest that the oil stockpile could decline by 1.833 MMbbls for the week ending June 12, 2015. The more-than-expected decline could support crude oil prices. The declining inventory implies that demand is increasing or supply is decreasing.

The recent volatility in the crude oil market narrowed the differences between WTI (West Texas Intermediate) crude oil and Brent crude oil prices. The spread between WTI and Brent was at $3.09 per barrel at the close of trade on Monday, June 15, 2015. Last month, the spread was at $7 per barrel.

The narrow spread is negative for US refineries like Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO). Combined, these companies account for 7.57% of the Energy Select Sector SPDR ETF (XLE). Energy ETFs like XLE and the SPDR Oil and Gas ETF (XOP) are also impacted by crude oil volatility.

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