US crude oil inventories
According to data released on December 16, US crude oil inventories rose 1% in the week ending December 11. The US refinery utilization rate fell to 91.9% from 93.1% in the previous week. The refinery utilization rate is calculated as gross input divided by refineries’ operable refining capacities. US crude oil inventories have risen significantly since mid-2014.
US crude oil production
In the week ending December 11, US crude oil production increased 0.1%. The above graph shows the weekly supply and demand for crude oil in the United States over the last six weeks. US crude oil production rose significantly starting in 2012.
US crude oil imports
US crude oil imports rose 3.6% in the week ending December 11 and 3.5% in the week ending December 4. With increased domestic production, imports had fallen over time to keep US crude oil supply relatively stable.
US refinery inputs
For the latest week, US crude oil refinery inputs were 16.6 MMbpd (million barrels per day). The inputs to US refineries were less than the total crude oil production and imports. 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). HEP forms ~0.7% of the Multi-Asset Diversified Income Index Fund (MDIV). MDIV invests nearly 17% of its portfolio in MLPs. Currently, US crude oil inventory levels are near 80-year highs. The high inventory levels have increased the demand for crude oil storage assets.
MLPs that have 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).