EIA’s crude oil inventory report
The EIA (U.S. Energy Information Administration) released its weekly petroleum status report on March 2, 2016. It reported that the US crude oil inventory rose by 10.4 MMbbls (million barrels) to 518 MMbbls for the week ending February 26, 2016. It’s the highest inventory build since March 2015. US crude oil stocks rose for the eighth time in the last ten weeks despite the refinery maintenance season. Read more about US refinery demand in Part 9 of this series. The US crude oil inventory rose due to the rise in US crude oil imports. We’ll discuss US crude oil imports in Part 8 of this series.
Crude oil inventory by regions
The EIA divides the US into five storage regions—East Coast, Midwest, Gulf Coast, Rocky Mountain, and West Coast. Crude oil inventories rose the most in the Gulf Coast region. They rose to 264.3 MMbbls for the week ending February 26, 2016—compared to 251.2 MMbbls for the week ending February 12, 2016. In contrast, crude oil stocks in the Midwest fell to 153.5 MMbbls from 155 MMbbls for the week ending February 26, 2016. The Gulf Coast and Midwest regions contribute the majority of US crude oil stocks. Crude oil stocks rose marginally in the West Coast region over the same period.
Record production led to record supplies. This led to the rise in storage capacities. The rise in crude oil stocks led to the rise in 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 and Record US Crude Oil Inventory Led to a New Storage Space.
Crude oil inventory estimates and impact
The current crude oil stocks are 17% more than the levels in 2015. They’re also at an 80-period high during this time of the year. They’re at a 34-year high. Reuters’ surveys suggest that crude oil stocks could rise by 3.6 MMbbls for the week ending February 26, 2016. The larger-than-expected rise in the US inventory and record inventory will continue to put pressure on crude oil prices. We’ll discuss gasoline and distillate stocks in Part 3 and Part 5 in this series.
The record low crude oil prices impact oil and gas producers like Apache (APA), Devon Energy (DVN), and Continental Resources (CLR). The record US crude oil inventory and the contango market support oil storage and transportation companies like Williams Companies (WMB), Spectra Energy (SE), Energy Transfer Partners (ETP), and Kinder Morgan (KMI).
The volatility in the oil and gas market impacts 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).