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EIA Crude Oil Inventory Report Supports Bearish Traders


Dec. 4 2020, Updated 10:53 a.m. ET

EIA crude oil inventory report 

The EIA’s (U.S. Energy Information Administration) released its crude oil inventory report yesterday. The US agency reported that the US commercial crude oil inventory rose by 2.6 MMbbls (million barrels) to 487.4 MMbbls for the week ending December 25, 2015. The US crude oil inventory rose for the eighth time in the last ten weeks despite the winter season. The US crude oil inventory rose due to the rise in US crude oil imports. Read more about US crude oil imports in the fifth part of this series.

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Crude oil inventory by region

The US storage of crude oil is divided into five regions: the East Coast, the Midwest, the Gulf Coast, the Rocky Mountains, and the West Coast. The crude oil inventory on the Gulf Coast was the highest among all regions and marginally increased to 243.3 MMbbls for the week ending December 25 as compared to previous week. In the second position was the Midwest, which reported 149.1 MMbbls for the same period.

Crude oil inventory estimates and impact 

The Wall Street Journal and Reuters polls estimated that US crude oil inventory had fallen by 1 MMbbls and 2.5 MMbbls for the week ending December 25, 2015. However, the unexpected rise in the US crude oil inventory led to the carnage in the crude oil market. US crude oil prices fell in yesterday’s trade.

The current crude oil inventory is 27% more than the level of 388 MMbbls recorded in 2014. The inventory is also at an 80-year high for this time of year. The record US and global crude oil inventories continue to weigh on the global market. The record crude oil inventory was a vital factor for keeping prices low in 2015, and it will be a key bearish factor for oil in 2016, too. In the next part of this series, we’ll see how the Cushing crude oil inventory affected crude oil prices.

The long-term lower crude oil prices affect US oil and gas exploration and production companies like Anadarko Petroleum (APC), Marathon Oil (MRO), Murphy Oil (MUR), and Apache (APA). In contrast, record inventory and the wider contango market benefit the US tanker industry. To learn more, read How the Fed Influences Contango Crude Oil Market Traders.” Some of the tankers that have benefited from the contango market are Frontline (FRO), DHT Holdings (DHT), Teekay Tankers (TNK), and Euronav (EURN).

The roller-coaster ride in the oil and gas market affects ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX Fund (FXN).


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