Crude oil inventories
The API (American Petroleum Institute) releases its weekly crude oil inventory report every Tuesday. It reported that US crude oil inventories rose by 2.6 MMbbls (million barrels) for the week ending January 1, 2016. Analysts expected the inventories to rise by 2.8 MMbbls for the week ending January 1, 2016.
Refinery input rose
Crude oil inventories are at record levels. However, the demand is very low due less demand for refined products like gasoline and distillates. To defend the market share, OPEC (Organization of the Petroleum Exporting Countries) and the US pumped more than the consumption levels. The current consumption levels are 1.7 MMbpd (million barrels per day) less than the supplies.
The positive forecasts of colder temperatures pushed refinery inputs. The demand is expected to rise in the coming weeks. Refineries are also running at more than 90% of their operable capacity to benefit from lower crude oil prices and higher refinery margins. So, crude oil inventories fell in the last week.
When analysts are expecting a rise in crude oil inventories, a fall is bullish for crude oil prices if other factors like geopolitical factors, supplies, and demand growth are stable. The fall in crude oil inventories gives extra revenue to crude oil producers. It increases their selling prices. This increases crude oil producers’ profitability like Apache (APA), Anadarko Petroleum (APC), ConocoPhillips (COP), Continental Resources (CLR), Petrobras (PBR), and Marathon Oil (MRO).
Marathon Oil accounts for 0.9% of the Energy Select SPDR (XLE).