API crude oil inventory
The API (American Petroleum Institute) is scheduled to release its weekly crude oil inventory estimates on March 29, 2016. On March 22, 2016, the API estimated that the US crude oil inventory rose by 8.8 MMbbls (million barrels) for the week ending March 18, 2016, compared with the previous week. The API crude oil inventory estimates rose for the fifth straight week. In contrast, Cushing crude oil stocks fell by 1.4 MMbbls (million barrels) for the same period. To learn more, read Could Cushing Crude Oil Stocks Support the Crude Oil Price Rally?
EIA crude oil inventory
Traders closely watch the API crude oil inventory estimates. The API crude oil inventory data is a precursor to the EIA’s (U.S. Energy Information Administration) weekly petroleum status report. Tuesday’s API data are followed by Wednesday’s EIA inventory data. The EIA is scheduled to release its weekly petroleum status report on March 30, 2016. The EIA reported that US crude oil inventory had risen by 9.4 MMbbls (million barrels) to 532.5 MMbbls for the week ending March 18, 2016, compared with the previous week. Consequently, US crude oil inventory tested its highest level ever.
Crude oil inventories affect storage costs. For more on this, read Crude Oil Storage Costs Rose 9 Times, US Crude Tests New Limits and Record US Crude Oil Inventory Led to a New Storage Space.
Impact of record nationwide crude oil inventories
Crude oil inventories exceeded the five-year average by 100 MMbbls. Reuters surveys project that crude oil inventories rose by 3.2 MMbbls for the week ending March 25, 2016. The record US crude oil inventory and estimates of rising crude oil stocks will limit the upside for crude oil prices.
Multiyear-low crude oil prices affect oil and gas producers like Cobalt International Energy (CIE), Halcón Resources (HK), SM Energy (SM), Sanchez Energy (SN), and Goodrich Petroleum (GDP). But, record global crude oil inventories and the contango market benefit crude oil tanker companies like Frontline (FRO), Nordic American Tankers (NAT), and DHT Holdings (DHT).
The volatility in the crude oil market affects the United States Oil Fund (USO), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the United States Brent Oil (BNO), and the United States 12 Month Oil (USL).
In the next part of this series, we’ll discuss the global crude inventories.