API inventory report
On July 14, 2015, the API (American Petroleum Institute) published its weekly US commercial crude oil inventory report. Crude oil stocks fell by 7.3 MMbbls (million barrels) for the week ending July 10, 2015. Last week, the API estimated that oil inventories fell by 0.96 MMbbls for the week ending July 3, 2015. The massive fall in crude oil inventories supported crude oil prices in yesterday’s trade.
The API data also added that inventories at Cushing, Oklahoma, rose by 420,000 barrels for the week ending July 10, 2015. The rising inventories will drag oil prices lower. Cushing, Oklahoma, is the crude oil delivery point for crude oil futures contracts traded in NYMEX.
The API data is followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil, gasoline, and distillates stocks report. This report is scheduled to release on Wednesday, July 15, 2015, at 10:30 AM EST. Last week, the EIA reported that crude oil stocks rose by 0.40 MMbbls to 465.8 MMbbls for the week ending July 3, 2015.
Surveys from Reuters suggest that oil stocks might fall by 1.9 MMbbls for the week ending July 10, 2015. Over the same period, Bloomberg estimates suggest that oil stocks fell by 1.9 MMbbls. However, if EIA oil inventories follow API oil stock estimates we could see oil prices heading higher. The summer driving season might have dragged crude oil inventories lower.
Currently, crude oil stocks are 22% more than the levels of 382 MMbbls last year. The record inventories might put pressure on crude oil prices in the oversupplied crude oil market. Despite record inventories, how long will oversupply concerns rule the crude oil market?
The uncertainty in the crude oil market impacts upstream players like Devon Energy (DVN), Hess (HES), and Noble Energy (NBL). They account for 9.09% of the Energy Select Sector SPDR ETF (XLE). These stocks also have a crude oil production mix that’s more than 46% of their total production. Volatility in the crude oil market also impacts ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).