11 Aug

API Data Are a Cue for Crude Oil’s Price Direction

WRITTEN BY Gordon Kristopher

API inventory report

The API (American Petroleum Institute) will release the weekly US crude oil inventory data on August 11, 2015. Last week, the API reported that crude oil inventories fell by 2.4 MMbbls (million barrels) for the week ending July 31, 2015. Gasoline stocks fell by 1 MMbbls over the same period. In contrast, distillates stocks rose by 1.7 MMbbls for the week ending July 31, 2015.

API Data Are a Cue for Crude Oil’s Price Direction

Inventory surveys and impact

The API data release ahead of the EIA’s (U.S. Energy Information Administration) crude oil inventory data. Crude oil traders closely watch this report for possible insight about the direction of crude oil prices.

The EIA’s report is scheduled to release on Wednesday, August 12, 2015, at 10:30 AM EST. Last week, the government data showed that the crude oil stockpile fell by 4.4 MMbbls to 455.3 MMbbls for the week ending July 31, 2015.

Market estimates suggest that crude oil and gasoline stocks could fall by 1.8 MMbbls and 1.033 MMbbls, respectively, for the week ending August 7, 2015. In contrast, distillates stocks are expected to rise by 1.2 MMbbls over the same period.

The rise or fall in crude oil prices influences crude oil prices. The falling inventory implies that crude oil supplies are falling or demand is getting slower. The markets are oversupplied, so there’s a possibility that the US crude oil imports have fallen or refinery demand rose over this period. As a result, the falling oil stockpile could benefit crude oil prices.

Currently, crude oil inventories are 24% more than the level of 365.61 MMbbls in 2014. The crude oil inventory is also near an 80-year high during this period of the year. This could add pressure to crude oil prices.

The collateral damage from crude oil prices will continue to affect oil producers like Hess (HES) and Noble Energy (NBL). Combined, they account for 6.69% of the Energy Select Sector SPDR ETF (XLE). However, lower oil prices benefit oil refiners like Philips 66 (PSX). In contrast, the falling oil prices also impact energy ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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