Does Seasonality Impact the Crude Oil Inventory?



Last week’s crude oil inventory fell

US commercial crude oil (USO) (UWTI) inventories fell by 3.4 MMbbls (million barrels) compared to the previous week for the week ending May 6, 2016. The inventories were at 539.98 MMbbls at the end of the week. US crude oil inventories fell from record high levels of 543.39 MMbbls, according to data released by the EIA (U.S. Energy Information Administration) on May 11, 2016. The EIA will release inventory data for the week ending May 13 on Wednesday, May 18.

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Is seasonality drawing the crude oil inventory down?

Since 2012 and 2014, crude oil (UCO)(DBO)(USL) inventories fell during May. The five-year average between 2011 and 2015 also indicates that crude oil inventories fall during May. The fall in inventory levels could be attributed to refineries finishing their maintenance activities in April before the US summer driving season starts. So, the inventory could fall more in May 2016. The seasonality study also indicates that inventory levels could continue decreasing until August.

The above analysis could be important for oil-weighted stocks such as Concho Resources (CXO), 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 (BNO), the DWA Energy Momentum (PXI), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

Next, we’ll discuss crude oil and the US Dollar Index’s relative performance.


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