API crude oil inventory
The API (American Petroleum Institute) is scheduled to release its weekly crude oil inventory report today. Last week’s API report showed that the US crude oil inventory had risen by 7.1 MMbbls (million barrels) for the week ending February 19, 2016. That marked the fifth rise in six weeks. The crude oil inventory at Cushing, Oklahoma, rose by 0.31 MMbbls (million barrels) for the week ending February 19, 2016. Read Cushing Crude Oil Inventory: More Heat for Oil Prices? to learn more about the Cushing crude oil inventory.
EIA crude oil inventory
The API report is followed by the EIA’s (U.S. Energy Information Administration) weekly petroleum status report. The EIA crude oil inventory report is scheduled to be released tomorrow. A rise in the crude oil inventory would be bearish for crude oil prices. In contrast, a fall in the crude oil inventory could support crude oil prices.
Long-term oversupply concerns have led to the rise of storage capacities, and the increase in crude oil inventories has led to the rise of crude oil storage utilization. For more on this, read How US Crude Oil Storage Utilization Has Reached 60% of Capacity. Also, read Crude Oil Storage Costs Rose 9 Times, US Crude Tests New Limits.
The rise in crude oil inventories implies that supply is increasing or demand is slowing down. The consensus of rising US crude oil inventories could continue to put pressure on crude oil prices and oil producers like Chesapeake Energy (CHK), Apache (APA), Devon Energy (DVN), and Continental Resources (CLR). Meanwhile, the rise in crude oil supply and the contango market have led to storage opportunities. This supports oil storage and transportation companies like DCP Midstream Partners (DPM), ONEOK (OKE), Spectra Energy (SE), and Kinder Morgan (KMI).
The roller-coaster ride in oil and gas prices also affects ETFs and ETNs such as the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bull 3x Shares ETF (ERX), and the iShares Global Energy ETF (IXC).
In the next part of this series, we’ll discuss how US crude oil production could be pivotal for oil prices in 2016.