Cushing stocks

The EIA (U.S. Energy Information Administration) reported that oil stocks at Cushing, Oklahoma, rose by 123,000 bpd (barrels per day) to 56,368 barrels for the week ending June 26, 2015. In contrast, oil stocks fell by 1.87 MMbbls (million barrels) for the week ending June 19. In 2014, weekly Cushing crude oil stocks were at 20,476 barrels for the week ending June 27. Cushing is the futures delivery point for NYMEX-traded crude oil. Oil stocks rose for the second time in the last ten weeks.

Cushing Stocks and Gasoline Inventories Swing Crude Oil Prices

The rising oil stocks imply that supply is rising or demand is falling. This will negatively impact crude oil prices. This will impact upstream companies like Apache (APA), Hess (HES), and Noble Energy (NBL). They account for 3.66% of the Energy Select Sector SPDR ETF (XLE). These stocks have a crude oil production mix that’s greater than 59% of their total production. Volatility in the oil market also affects ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

US commercial crude oil stocks rose by 2.4 MMbbls to 465.4 MMbbls for the week ending June 26, 2015. This will also add pressure to oil prices. Despite this pessimistic sentiment, surging gasoline prices and slowing gasoline stocks gave a new dimension to crude oil’s price direction.

According to the latest EIA petroleum status report, gasoline and distillate output rose and averaged 10 MMbpd (million barrels per day) and 5 MMbpd for the week ending June 26, 2015. In spite of the rising production, gasoline inventories fell by 1.8 MMbbls over the same period. The summer holiday demand will drive gasoline prices. As a result, prices rose yesterday. This could boost oil prices for the July 4 holiday.

Higher oil prices will also benefit crude oil and natural gas drillers.

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