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US Crude Oil Production Fell 0.2%, Impacted MLPs

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US crude oil inventories

According to data released on November 25, US crude oil inventories rose 0.2% in the week ending November 20—compared to the previous week. At the same time, the refinery utilization rate in the US rose to 92% from 90.3% in the previous week. The refinery utilization rate is the gross inputs to refineries divided by refineries’ operable refining capacities. US crude oil inventories rose since mid-2014. They peaked in April 2015.

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US crude oil production

In the week ending November 20, the US crude oil production fell 0.2% compared to the previous week. The above graph shows the weekly supply and demand for crude oil in the US over the last six weeks. The US crude oil production rose significantly starting in 2012. However, there has been a slight fall in the crude oil production over the last three months.

US crude oil imports

US crude oil imports rose 5.2% compared to the previous week. Imports fell 5.5% in the week ending November 13. With increased domestic production, imports fell over time to keep US crude oil supply relatively stable.

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US refinery inputs

For the latest week, the US crude oil refinery inputs were 16.4 MMbpd (million barrels per day). The inputs to US refineries were less than the total crude oil production and imports. This might contribute to a rise in the crude oil inventories. The crude oil supply and demand dynamics drive crude oil prices.

Impact on MLPs

The demand for crude oil and refined products drives the volume and revenue for pipeline MLPs like Genesis Energy (GEL), NuStar Energy (NS), and Holly Energy Partners (HEP). Currently, the crude oil inventory levels in the US are near 80-year highs. The high inventory levels increased the demand for crude oil storage assets.

MLPs that have a crude oil storage capacity should benefit from the increased demand for storage. MLPs with storage assets include Plains All American Pipeline (PAA) and Blueknight Energy Partners (BKEP). Plains All American Pipeline forms 0.8% of the Guggenheim Multi-Asset Income ETF (CVY).

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