API crude oil inventories
On March 22, 2016, the API (American Petroleum Institute) is scheduled to release its weekly crude oil inventory report. API reported that the US crude oil inventory rose by 1.5 MMbbls (million barrels) for the week ending March 11, 2016, and this estimate shows that US crude oil stocks rose for the fifth time in the past six weeks.
EIA crude oil inventories
Traders closely watch the API crude oil inventory data. API crude oil inventory data releases every Tuesday, which is followed by the EIA’s (US Energy Information Administration) weekly petroleum status report on Wednesday. The EIA will release the weekly crude oil inventory report on March 23, 2016, and the government agency has already reported that US crude oil inventories rose by 1.3 MMbbls to 523.2 MMbbls for the week ending March 11. The rise in US crude oil inventories influences storage costs. (For more on this, check out “Crude Oil Storage Costs Rose 9 Times, US Crude Tests New Limits” and “Record US Crude Oil Inventory Led to a New Storage Space.”)
Crude oil inventories estimates and their impact
Crude oil inventories have already exceeded the five-year average by 100 MMbbls. They are also at the highest levels during this period of the year in the last eight decades. Reuters poll suggest that US crude oil inventories had risen by 3 MMbbls for the week ending March 18. Record nationwide crude inventories and a consensus of rising US crude oil inventories could limit the upside for crude oil prices.
Low crude oil prices negatively affect oil and gas exploration and production companies like Bonanza Creek Energy (BCEI), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM). However, the record US and global crude oil inventories and the contango market benefit crude oil tanker companies like Teekay Tankers (TNK) and DHT Holdings (DHT). The ups and down in crude oil prices affects the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and Fidelity MSCI Energy (FENY).
In the next part, we’ll take a closer look at the slowdown in US crude oil production. Read on for the inside story and analysis.