API stockpile report
On August 4, 2015, the API (American Petroleum Institute) published its weekly crude oil, gasoline, and distillate inventory report. The data showed that the US crude oil stockpile fell by 2.4 MMbbls (million barrels) for the week ending July 31, 2015. Likewise, crude oil inventories fell by 1.9 MMbbls for the week ending July 24, 2015.
The API data added that gasoline inventories fell by 0.946 MMbbls and distillate stocks rose by 1.7 MMbbls for the week ending July 31, 2015. Over the same period, crude oil inventories at Cushing, Oklahoma, fell by 0.504 MMbbls. Cushing is the largest crude oil storage hub in the US. It’s the futures delivery point of NYMEX crude oil.
Inventory estimates and impact
Traders watch the API data closely. It’s the precursor to the EIA’s (U.S. Energy Information Administration) crude oil inventory data. The next EIA stockpile report is expected to release on Wednesday, August 5, 2015, at 10:30 AM EST. The weekly US crude oil stockpile fell by 4.2 MMbbls to 459.7 MMbbls for the week ending July 24, 2015.
The market surveys from Bloomberg, Reuters, Platt’s, the Wall Street Journal, and the API estimate that crude oil inventories could fall between 1.5 MMbbls and 2.4 MMbbls for the week ending July 31, 2015. The estimates of the falling crude oil inventory may benefit crude oil prices. The falling oil stockpile implies that supply is falling or demand is rising. The oil inventories might have fallen due to the fall in crude oil imports or due to the rise in refinery demand.
However, we should remember that the current crude oil stock is 25% more than the level of 367.37 MMbbls last year. It’s also 95 MMbbls more than the five-year seasonal average. The oil stock is also near an 80-year high during this period of the year. This could negatively impact crude oil prices. The widening gap between supply and demand might also add pressure to crude oil prices.
The mammoth fall in crude oil prices in July and August 2015 will continue to impact oil producers’ margins like Pioneer Natural Resources (PXD), Hess (HES), and Noble Energy (NBL). They account for 10.21% of the Energy Select Sector SPDR ETF (XLE). These stocks’ crude oil production mix is more than 46% of their total production. Lower crude oil prices also impact oil and gas ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).