22 Apr

Did the Rise in Crude Oil Inventory Meet Expectations?

WRITTEN BY Gordon Kristopher

EIA’s crude oil inventory 

The EIA (U.S. Energy Information Administration) released its weekly petroleum status report on April 20, 2016. The government agency reported that the US crude oil inventory rose by 2.1 MMbbls (million barrels) to 538.6 MMbbls for the week ending April 15 as compared to the previous week. Reuter’s surveys had estimated that the nationwide crude oil inventory would rise by 2.4 MMbbls for the same period. The less-than-expected rise in the US crude oil inventory boosted crude oil prices. To learn more about crude oil prices, read the previous part of this series. The US crude oil inventory rose due to the rise in US crude oil imports. To learn more, read the next part of this series.

Did the Rise in Crude Oil Inventory Meet Expectations?

US crude oil inventory by region 

The EIA divides the United States into five storage regions: the East Coast, Midwest, Gulf Coast, Rocky Mountain, and West Coast regions. The US crude oil inventory in the Gulf Coast region was flat at 284.5 MMbbls for the week ending April 15 compared to the previous week. In the Midwest region, the crude oil inventory fell by 0.4 MMbbls to 153.3 MMbbls for the same period. The East Coast region’s crude oil inventory also fell by 0.2 MMbbls to 17.4 MMbbls.

In contrast, the crude oil inventory rose by 1 MMbbls to 57.1 MMbbls in the West Coast region for the same period. Similarly, in the Rocky Mountain region, the crude oil inventory rose by 2 MMbbls to 26.4 MMbbls.

Did the Rise in Crude Oil Inventory Meet Expectations?

Impact of record US crude oil inventory

The total nationwide crude oil inventory hit an all-time high of 538.6 MMbbls in the week ending April 15. The crude oil inventory is 10% higher than in the corresponding period in 2015. The record-high US crude oil inventory limits the upside potential for crude oil prices.

The contango market and the record-high US crude oil inventory benefit crude oil tanker companies like Nordic American Tankers (NAT), Teekay Tankers (TNK), and Tsakos Energy Navigation (TNP).

The volatility in crude oil prices influences oil and gas producers like Ultra Petroleum (UPL), Bill Barrett (BBG), Bonanza Creek Energy (BCEI), and Sanchez Energy (SN). They also influence ETFs like the PowerShares DWA Energy Momentum Portfolio (PXI), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), and the Direxion Daily Energy Bear 3x ETF (ERY).

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

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