Crude oil inventories rose last week
US commercial crude oil (USO) (UWTI) inventories rose by 1.3 MMbbls (million barrels) for the week ended May 13, 2016, compared to the previous week. The inventories were 541.3 MMbbls at the end of the week, according to data released by the EIA (U.S. Energy Information Administration) on May 18, 2016.
Why May is a magic month for crude oil inventories
In 2012 and 2014, crude oil (UCO) (DBO) (USL) inventories fell in May. The five-year average from 2011 to 2015 also indicates that crude oil inventories typically fall in May. This could be attributed to refineries finishing their maintenance activities in April and revving up gasoline production before the US summer driving season starts. So inventories could fall more in May. The seasonality study also shows that inventory levels could continue decreasing until August. This explains why May is a magic month for crude oil inventories.
This could be important for oil-weighted stocks such as Concho Resources (CXO), Abraxas Petroleum (AXAS), Halcon Resources (HK), Synergy Resources (SYRG), and Kosmos Energy (KOS). Crude oil sentiments also impact ETNs and ETFs such as the United States Brent Oil ETF (BNO), the PowerShares DWA Energy Momentum ETF (PXI), and the ProShares UltraShort Bloomberg Crude Oil (SCO).
In the next part, we’ll analyze the relationship between oil rigs and prices.