EIA inventory report
On July 1, 2015, the EIA (U.S. Energy Information Administration) released the weekly petroleum status report. The government data showed that the oil stockpile rose by 2.4 MMbbls (million barrels) to 465.4 MMbbls for the week ending June 26, 2015—compared to the fall by 4.9 MMbbls to 463 MMbbls for the week ending June 19, 2015. On Tuesday. June 30, the API (American Petroleum Institute) reported that crude oil stocks rose by 1.9 MMbbls for the week ending June 26, 2015.
Market surveys showed that the crude oil stockpile might fall between 2 MMbbls and 2.4 MMbbls. In contrast, the unexpected rise in crude oil stocks led to carnage in the crude oil market. The rising stocks imply that supply is rising or demand is falling. Oil inventories rose for the first time since April 2015.
To add more pressure to the oil market, inventories at Cushing, Oklahoma, also rose by 123,000 bpd (barrels per day). Cushing is the futures delivery point for NYMEX-traded crude oil.
Refinery demand fell marginally by 1,000 bpd to 16.5 MMbpd (million barrels per day) of crude oil for the week ending June 26, 2015. Over the same period, refineries operated at 94.2% of their capacity—compared to 93.7% for the week ending June 19, 2015.
Gasoline and distillate production was at 10 MMbpd and 5 MMbpd for the week ending June 26, 2015. Summer demand led to the fall in gasoline inventories by 1.8 MMbbls over the same period. In contrast, distillates stocks rose by 0.4 MMbbls.
Rising oil stocks and falling refinery demand will continue to put pressure on crude oil prices. Even the strong dollar will put pressure on dollar-denominated crude oil prices. The long-term downward trend of oil prices will impact oil and gas producers like Murphy (MUR), Hess (HES), and Marathon (MRO). Combined, they account for 3.40% of the Energy Select Sector SPDR ETF (XLE). These companies also have a crude oil production mix that’s more than 59% of their total production. They also impact ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).