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Total US Crude Oil Inventories Hit the Highest Level Ever

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EIA’s crude oil inventory  

On April 27, 2016, the EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report. The report showed that the nationwide crude oil inventory rose by 2 MMbbls (million barrels) to 540.6 MMbbls between April 15 and April 22, 2016. A Reuters’ poll estimated that US crude oil stocks would rise by 2.4 MMbbls for the same period. The rise in the US crude oil inventory saw crude oil prices fall in the early morning trade on April 27, 2016. However, prices hit a 2016 high later in the day. Why? To learn more about crude oil prices, read the previous part of this series. The US crude oil inventory rose due to the fall in refinery demand. To learn more, read the next part of this series.

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US crude oil inventory by region  

The EIA divides the US into five storage regions:

  1. East Coast
  2. Midwest
  3. Gulf Coast
  4. Rocky Mountain
  5. West Coast

The Gulf Coast region and Midwest region contribute to the majority of the US crude oil inventory. In the Gulf Coast region, the crude oil inventory rose by 1.1 MMbbls to 285.6 MMbbls for the week ending April 22—compared to the previous week. The crude oil inventory in the Midwest region rose by 1.6 MMbbls to 154.9 MMbbls for the same period. The East Coast region’s crude oil inventory also rose by 0.5 MMbbls to 17.9 MMbbls. In the Rocky Mountain region, the crude oil inventory rose by 0.3 MMbbls to 26.7 MMbbls for the same period. In contrast, in the West Coast region, the crude oil inventory fell by 1.4 MMbbls to 55.7 MMbbls for the same period.

Impact of record US crude oil inventory 

The total US crude oil inventory hit an all-time high of 540.6 MMbbls in the week ending April 22. The nationwide crude oil stocks are 10% more than in the same period in 2015. The record-high US crude oil inventory limits the upside potential for crude oil prices.

The contango market and record-high US crude oil inventory benefit crude oil tanker companies like Nordic American Tankers (NAT) and Frontline (FRO).

Low crude oil prices influence oil and gas producers like Bill Barrett (BBG), Halcon Resources (HK), Bonanza Creek Energy (BCEI), and Sanchez Energy (SN). The volatility in crude oil prices also impacts ETFs like the PowerShares DWA Energy Momentum Portfolio (PXI), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), and the United States Brent Oil ETF (BNO).

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

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