Falling Gasoline Inventories Limited the Downside for Crude Prices



Gasoline inventory 

On April 13, 2016, the EIA (U.S. Energy Information Administration) released its “This Week in Petroleum” report. It reported that US gasoline inventories fell by 4.2 MMbbls (million barrels) to 239.8 MMbbls between April 1 and April 8, 2016. Industry surveys estimated that gasoline stocks could have fallen by 1.4 MMbbls for the same period. The total US gasoline inventories are 5% more than the same period in 2015. They’re also higher than the five-year upper range.

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Gasoline production, imports, and demand   

The EIA added that the weekly US gasoline production fell by 49,000 bpd (barrels per day) to 9.6 MMbpd (million barrels per day) for the week ending April 8, 2016—compared to the previous week. It’s 4% more than the same period in 2015. Gasoline imports also fell by 0.10 MMbpd to 0.57 MMbpd for the same period. In contrast, the gasoline demand rose by 409,000 bpd to 9.6 MMbpd for the week ending April 8, 2016—compared to the previous week.

Impact of the fall in gasoline inventories  

The rise in gasoline demand and exports led to a fall in gasoline stocks. The larger-than-expected decline in gasoline stocks limited the downside for crude oil prices on April 13, 2016. To learn more about crude oil prices, read the first part of the series. The fall in gasoline stocks benefits gasoline prices. To know more about gasoline prices, read the previous part of the series.

High gasoline prices benefit US refiners like Tesoro (TSO) and Northern Tier Energy (NTI). Likewise, high crude oil prices benefit oil and gas producers like Ultra Petroleum (UPL), Whiting Petroleum (WLL), PDC Energy (PDCE), Cobalt International Energy (CIE), and Comstock Resources (CRK).

ETFs and ETNs like the Direxion Daily Energy Bull 3x Shares ETF (ERX), the PowerShares DWA Energy Momentum (PXI), the First Trust Energy AlphaDEX Fund (FXN), and the VelocityShares 3x Inverse Crude Oil ETN (DWTI) are affected by the rise and fall in crude oil prices.

Read the next part of the series to learn more about diesel fuel prices.


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