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Analyzing the US Crude Oil Inventory and Gasoline Demand

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Crude oil prices fell  

June WTI (West Texas Intermediate) crude oil futures contracts fell by 2.5% and settled at $42.64 per barrel on April 25, 2016. Brent crude oil futures also fell by 1.4% to $44.5 per barrel. Prices fell due to the expectation of rising US crude oil inventory. Oil tracking ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) also fell in the direction of crude oil prices. They fell by 2% and 3.1%, respectively, on April 25, 2016.

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US gasoline demand 

The EIA (U.S. Energy Information Administration) reported that the average US gasoline demand over four weeks rose by 3.9% to 9.39 MMbpd (million barrels per day) for the week ending April 15, 2016—compared to the same period in 2015. The gasoline demand is expected to rise during the summer driving season by 1.4% year-over-year to record levels in 2016. The U.S. Department of Transportation reported that US drivers drove 232.2 billion vehicle miles in February 2016. This is 5.6% more than the same period in 2015. The rise in gasoline demand, the oil strike in Kuwait, and slowing US production saw US crude oil prices gain for three straight weeks. However, the rally was short-lived. We’ll discuss the US crude oil inventory in the next part of the series. 

Oversupplied crude oil and the failure of oil producers’ meeting in Doha also weighed on crude oil prices. Oil prices fell from five-month highs. Multiyear low crude oil prices impact oil producers like Swift Energy (SFY), Carrizo Oil & Gas (CRZO), PDC Energy (PDCE), and Cobalt International Energy (CIE). Uncertainty in the oil market impacts ETFs like the iShares U.S. Oil Equipment & Services ETF (IEZ), the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3 x (ERY), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

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Global equities and oil 

Global equity markets fell for the third straight day on April 25, 2016. It pushed crude oil prices lower on the same day. The SPDR S&P 500 ETF (SPY) also fell by 0.9% and settled at $208.9 on April 25, 2016. The Bloomberg Commodity Index also fell by 0.2% on the same day.

Series focus 

This series focuses on the American Petroleum Institute’s crude oil stocks, Cushing crude oil stocks, the US crude oil rig count, Saudi Arabia’s crude oil production, Iran’s crude oil production, the U.S. Commodity Futures Trading Commission’s “Commitment of Traders” report, and the crude oil price forecast.

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