API Data: Will the Bloodbath Extend for Crude Oil Prices?

The API (American Petroleum Institute) will publish the weekly crude oil, gasoline, and distillates inventory report on July 28, 2015. Last week, crude oil inventories rose by 2.3 MMbbls (million barrels) for the week ending July 17, 2015. The preliminary surveys from Reuters suggest that crude oil inventories fell by 300,000 barrels to 463.6 MMbbls for the week that ending July 24. This is 100 MMbbls above the five-year average.

The API data are followed by the EIA (U.S. Energy Information Administration) crude oil stockpile data. The EIA’s next report is scheduled to release on July 29, 2015. US crude oil inventories rose by 2.5 MMbbls to 463.9 MMbbls for the week ending July 17, 2015. US crude oil stocks remain near levels that haven’t been seen this time of year for at least 80 years. This could continue to put downward pressure on crude oil prices. However, market surveys project a marginal fall in crude oil inventories by 300,000 barrels for the week ending July 24, 2015. The possible fall in imports and seasonal demand might have led to the fall in inventories over this period.

In contrast, gasoline inventories are expected to rise by 0.50 MMbbls for the week ending July 24, 2015—against the fall of 1.725 MMbbls for the week ending July 17, 2015. Likewise, distillates stocks are expected to rise by 1.33 MMbbls for the week ending July 24, 2015—compared to a rise of 0.235 MMbbls for the week ending July 17, 2015. The consensus of a rising refined products inventory buildup will add pressure to the crude oil market.

The global inventories are expected to be at 2.2 MMbpd (million barrels per day) in 1H15, according to EIA sources. They are 0.9 MMbpd more than the levels in 2014. This will continue to be negative for crude oil prices. Despite the carnage in the oil market, crude oil rigs rose.

The roller coaster ride of crude oil prices impacts upstream players like Chevron (CVX), Hess (HES) and Apache (APA). Combined, they account for 16.33% of the Energy Select Sector SPDR ETF (XLE). The volatility in crude oil prices also affects oil and gas ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).