API and EIA inventory estimates
The API (American Petroleum Institute) reported oil inventory estimates on June 16, 2015. According to the report, the crude oil stockpile dropped by 2.9 MMbbls (million barrels) for the week ending June 12, 2015—compared to the decline of 6.7 MMbbls for the week ending June 5, 2015. Likewise, gasoline stocks declined by 2.9 MMbbls for the week ending June 12, 2015—compared to a decline of 3.9 MMbbls for the week ending June 5, 2015.
Energy traders watch the API data closely because it’s followed by the EIA’s (U.S. Energy Information Administration) inventory report. The EIA’s report will be published at 10:30 AM EST on Wednesday, June 17, 2015. Last week, the EIA data showed that US commercial crude oil inventories dropped by 6.8 MMbbls to 470.6 MMbbls for the week ending June 5, 2015. The record decline in the oil inventory was supported by increasing demand from US refineries. The current stockpile is 21% more than the levels last year.
Data compiled from Reuters and Bloomberg show that the crude oil stockpile could decline by 1.7 MMbbls and 2.5 MMbbls, respectively, for the week ending June 12, 2015. The better-than-expected drop might support oil prices. The declining oil inventory implies that demand is increasing or supply is decreasing.
However, crude oil markets are oversupplied due to massive production from OPEC (Organization of the Petroleum Exporting Countries), Russia, and the US. The oversupply sentiments could push crude oil prices lower despite declining inventories. Lower oil prices impact US shale oil producers like Whiting Petroleum (WLL), Continental Resources (CLR), and Marathon Oil (MRO).
Energy ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Select Sector SPDR Fund ETF (XLE) also mirrored the price movement of crude oil in yesterday’s trade. They rose slightly.