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Crude Oil Refined Products: Will the Bulls Outcast the Bears?


Nov. 4 2015, Updated 6:30 a.m. ET

API data 

The API (American Petroleum Institute) published the weekly crude oil, gasoline, and distillates inventory report on November 3, 2015. It reported that crude oil stocks rose by 2.8 MMbbls (million barrels) for the week ending October 30, 2015. Last week, crude oil stocks rose by 4.1 MMbbls for the week ending October 23, 2015.

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EIA’s crude oil inventory estimates and impact 

The API crude oil inventory data are the precursor to the EIA’s (U.S. Energy Information Administration) crude oil inventory report. The EIA is scheduled to release its weekly oil report on Wednesday, November 4, 2015. The government data showed that crude oil stocks rose by 3.4 MMbbls to 480 MMbbls for the week ending October 23, 2015. Surveys by Bloomberg and Reuters suggest that crude oil stocks could rise by 2.5–2.7 MMbbls for the week ending October 30, 2015. Currently, crude oil stocks are 26.4% more than the level of 380 MMbbls last year. The rising crude oil stocks and record inventory will put pressure on crude oil prices.

EIA’s refined products inventory estimates and impact

Last week, the distillate and gasoline inventories fell by 3 MMbbls and 1.1 MMbbls for the ending October 23, 2015. Market surveys suggest that gasoline stocks could fall by 1 MMbbls for the week ending October 30, 2015. Likewise, distillates stocks could fall by 1.8 MMbbls for the same period. The estimates of falling refined products inventory could benefit crude oil prices. The consensus of falling gasoline inventory led to the rise in gasoline prices on November 3. The rise in refined products demand will boost the crude oil demand. To learn more about gasoline prices, visit the next part of the series.

The tug of war between the refined products inventory and crude oil inventory will swing crude oil prices in either direction. However, the long-term trend is bearish. Prices rose in the last five days. The recent rise could benefit oil producers like Apache (APA), EOG Resources (EOG), and ConocoPhillips (COP). However, it negatively impacts refiners like Tesoro (TSO) and Valero Energy (VLO). The uncertainty in the oil market impacts ETFs like the PowerShares DWA Energy Momentum ETF (PXI) and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).


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