On October 27, 2015, the API (American Petroleum Institute) will release its weekly crude oil stockpile report. The data showed that the US commercial crude oil stockpile rose by 7.1 MMbbls (million barrels) for the week ending October 16, 2015. Similarly, US crude oil stocks rose by 9.3 MMbbls for the week ending October 9, 2015—the highest inventory rise since April 2015. The US crude oil inventory hit record levels due to slowing refinery demand. The demand slowed down due to refinery maintenance.
The API data are followed by the EIA’s (U.S. Energy Information Administration) weekly petroleum status report. The report is scheduled to release on October 28, 2015. Last week, crude oil stocks rose by 8 MMbbls to 476.6 MMbbls for the week ending October 16—the highest rise in crude oil stocks since April 2015. In contrast, gasoline and distillate stocks fell by 1.5 MMbbls and 2.6 MMbbls, respectively, for the same period.
Inventory estimates and impact
The preliminary estimates from Reuters suggest that the crude oil inventory could rise by 3 MMbbls for the week ending October 23, 2015. The consensus of the rising inventory implies more supplies or weak demand. Currently, crude oil stocks are 26% more than the level of 377.6 MMbbls in 2014. During this period of the year, crude oil stocks are also at the highest level in the past 85 years. The record crude oil stocks and consensus of rising crude oil inventory and weak refinery demand will drag crude oil prices lower.
Falling crude oil prices will impact oil producers’ margins like Chevron (CVX), Hess (HES), Noble Energy (NBL), Murphy Oil (MUR), and Newfield Exploration (NFX). These companies’ crude oil output mix is more than 41% of their total portfolio. The volatility in the crude oil market also impacts energy ETFs like the iShares US Oil & Gas Exploration & Production ETF (IEO) and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).