US crude oil imports
Record US oil production has led to a drop in the weekly US crude oil imports. The EIA (U.S. Energy Information Administration) reported that weekly US crude oil imports fell by 986,000 bpd (barrels per day) to 7.3 MMbpd (million barrels per day) for the week ending December 18, 2015. The weekly US crude oil imports fell by 12% from 2014 levels.
Impact of US crude oil imports
The four-week average for crude oil imports came in at 7.8 MMbpd—3.9% higher than the 7.6 MMbpd recorded last year. The rise in crude oil imports could increase supply in the US market, and US inventory could rise. An increase in supply would negatively affect oil prices, which would benefit US refiners like Alon USA Energy (ALJ), HollyFrontier Corporation (HFC), and Phillips 66 (PSX).
A rise in imports doesn’t always affect oil prices, but in the oversupplied market in 2016, investors should closely watch import figures. Considering the lifting of the oil export ban, US oil imports could slow down in 2016. Oil producers are getting ready to take advantage of the export ban, although the current WTI-Brent spread makes US crude oil exports unviable.
ETFs like the iShares U.S. Oil Equipment & Services ETF (IEZ), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX Fund (FXN) are also influenced by the rises and falls in the oil market.
Read how refinery demand influences the crude oil market in the next part of this series.