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Pressure for Crude Oil Prices? Inventory Rose for the Seventh Week

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EIA crude oil inventories  

On March 30, 2016, the EIA (U.S. Energy Information Administration) published its weekly crude oil inventory report. It reported that the US crude oil inventory rose by 2.3 MMbbls (million barrels) to 534.8 MMbbls between March 18, 2016, and March 25, 2016. Market surveys projected that crude oil inventories could rise by 3.3 MMbbls for the same period. The less-than-expected inventory increase supported crude oil prices on March 30, 2016. To find out more about crude oil prices, read the previous part of the series.

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US crude oil inventory by region 

The EIA divides the US into five storage regions:

  • East Coast
  • Midwest
  • Gulf Coast
  • Rocky Mountain
  • West Coast

The Gulf Coast and Midwest regions contribute to most of the US crude oil stocks. In the Gulf Coast region, the crude oil inventories rose from 280 MMbbls to 281.9 MMbbls for the week ending March 25, 2016—compared to the previous week. The Midwest crude oil inventories rose slightly by 0.6 MMbbls to 154.8 MMbbls for the same period. Crude oil stocks fell marginally by 0.7 MMbbls to 56 MMbbls in the West Coast region for the same period. The East Coast and Rocky Mountain crude oil stocks rose marginally to 18.5 MMbbls and 23.7 MMbbls, respectively, for the week ending March 25, 2016—compared to the previous week.

The ups and downs in the US crude oil stocks impact storage costs. To learn more, 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 US crude oil inventory  

For the week ending March 25, 2016, the total US crude oil inventories hit an all-time high. The US crude oil inventories are also 14% more than the 2015 levels during this period of the year. The US crude oil inventories rose for the seventh consecutive week. They’re also 100 MMbbls more than the five-year average crude oil inventory. Record US crude oil inventories could put pressure on crude oil prices. To learn more, read How Global Crude Oil Inventory Will Limit the Upside for Crude Oil.

The record US crude oil inventory and wide contango market benefit crude oil tanker companies like Nordic American Tankers (NAT), Frontline (FRO), and DHT Holdings (DHT).

Multiyear low crude oil prices impact oil and gas exploration and production producers like QEP Resources (QEP), WPX Energy (WPX), Comstock Resources (CRK), and Triangle Petroleum (TPLM). The roller coaster ride in crude oil prices impacts ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Guggenheim S&P 500 Equal Weight Energy (RYE), the United States Brent Oil (BNO), and the United States 12 Month Oil (USL).

Read the next part of the series to learn more about US crude oil production, refinery demand, and crude oil imports.

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