API inventory estimates
On August 25, 2015, the API (American Petroleum Institute) published the weekly crude oil, gasoline, and distillate stocks report. The API report showed that US commercial crude oil stocks fell by 7.3 MMbbls (million barrels) for the week ending August 21, 2015—compared to a fall of 2.3 MMbbls for the week ending August 14, 2015. The API data also added that distillate stocks rose by 1.5 MMbbls over the same period. Likewise, the gasoline stockpile rose by 0.071 MMbbls for the week ending August 21, 2015.
EIA inventory estimates and its impact
Traders watch the API data closely because it’s a precursor to the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report. The EIA stockpile will release on Wednesday, August 26, 2015. For the week ending August 14, 2015, the government data showed that the crude oil stockpile rose by 2.6 MMbbls to 456.2 MMbbls.
The API oil stock estimates suggest a fall in crude oil inventory as stated earlier. In contrast, market surveys from Reuters to Bloomberg project that the crude oil stockpile could rise between 0.3 MMbbls and 2.6 MMbbls for the week ending August 21, 2015.
The latest survey by the Wall Street Journal projects that distillates stock that consist of heating oil and diesel could rise by 1.1 MMbbls over the same period. In contrast, gasoline inventories are projected to fall by 1.1 MMbbls for the week ending August 21, 2015.
Refinery utilization is estimated to fall by 0.60% to 94.50% for the week ending August 21, 2015—compared to the previous week. The fall in the inventory and refinery utilization might be due to seasonal refinery maintenance and the summer driving season nearing an end.
Currently, the US commercial crude oil stocks are 25.80% more than the level of 362.5 MMbbls in 2014. They’re also near an 80-year high during this period of the year. The record stockpile and estimates of the rising stockpile will continue to put downward pressure on crude oil prices.
The long-term lower crude oil prices impact US upstream players like Occidental Petroleum (OXY), ExxonMobil (XOM), and Newfield Exploration (NFX). Together, these companies account for 19.35% of the Energy Select Sector SPDR ETF (XLE). Energy ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) are also affected by falling crude oil prices.