EIA gasoline and distillate inventories
The EIA[1. U.S. Energy Information Administration] reported that the US gasoline inventory rose by 4.6 MMbbls (million barrels) to 245 MMbbls for the week ending January 15, 2016. Likewise, distillate stocks rose by 1 MMbbls for the same period. Additionally, gasoline and distillate inventories rose by 8.4 MMbbls to 240.4 MMbbls for the week ending January 8, 2016.
Gasoline and distillate inventories and estimates
Industry surveys projected that gasoline and distillate inventories may have risen by 1.4 MMbbls and 1.3 MMbbls, respectively, for the week ending January 15. Meanwhile, the American Petroleum Institute reported that gasoline and distillate inventories rose by 4.7 MMbbls and 1.5 MMbbls, respectively, for the same period.
This better-than-expected rise in gasoline and distillate inventories didn’t affect crude oil prices because short covering and weather boosted the prices in the January 21 trade. Even the rising crude oil stocks didn’t affect crude oil prices.
Gasoline stocks rose due to the rise in gasoline production. Meanwhile, distillate stocks rose due to the weak distillate demand caused by warmer-than-normal weather. Read the next part of the series to know more about the US crude oil production.
The depressed oil market will likely have a negative impact on the earnings of upstream players like Chevron (CVX), Occidental Petroleum (OXY), Hess (HES), and Marathon Oil (MRO). But, they benefit oil refiners like Tesoro (TSO), Valero Energy (VLO), and Phillips 66 (PSX). The current gasoline and distillate stocks are close to five-year seasonal highs, putting pressure on the demand from refineries. We’ll talk more about refinery demand in the sixth part of the series. The rising glut in the refined products market is bearish for crude oil producers and refiners.
The volatility in the oil and gas market affect ETFs like the United States Oil Fund (USO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the Vanguard Energy ETF (VDE), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).