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Rising US Crude Oil Imports Support US Crude Oil Stocks

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Jan. 5 2016, Updated 9:06 a.m. ET

US crude oil imports 

As discussed in the previous part of this series, rising refinery demand is driving the demand for US crude oil imports. The EIA (U.S. Energy Information Administration) reported that weekly US crude oil imports rose by 566,000 bpd (barrels per day) to 7.9 MMbpd (million barrels per day) for the week ending December 25, 2015. The weekly US crude oil imports rose by 10% from last year’s levels.

The four-week average for US crude oil imports came in at 7.9 MMbpd. US imports surged due to the rise in refinery demand stemming refineries’ return from seasonal maintenance. The rise in imports led to the rise in crude oil inventory, as discussed in the second part of this series.

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Impact

US refineries are dependent on heavy crude oil rather than on light US crude oil. Thus, the United States will import more crude oil. Rising refinery demand is bullish for US oil producers like Chesapeake Energy (CHK), Devon Energy (DVN), and Hess (HES). However, record-low oil prices negatively affect producers but benefit refiners like Alon USA Energy (ALJ), HollyFrontier (HFC), and Phillips 66 (PSX).

The turmoil in the energy market could be the epicenter of a global market standstill. The volatility in oil and gas prices impacts ETFs like the ProShares Ultra Short Bloomberg Crude Oil EFT (SCO), the iShares US Oil & Gas Exploration & Production ETF (IEO), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX Fund (FXN).

Read the next part of this series to learn about the US crude oil rig count.

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