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US Gasoline Inventories Resume Their Downward Trend

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Gasoline inventories 

The EIA (U.S. Energy Information Administration) released its weekly petroleum report on May 11, 2016. It reported that US gasoline inventories fell by 1.2 MMbbls (million barrels) to 240.6 MMbbls between April 29–May 6, 2016.

Market surveys estimated that gasoline inventories would fall by 0.71 MMbbls during the same period. The larger-than-expected decline supported gasoline prices. To learn more about gasoline prices, please read Part 4 of the series.

Gasoline stocks hit a high of 259 MMbbls for the week ended February 12, 2016. The US gasoline inventory is currently 6% higher compared to the same period in 2015. It’s also more than the five-year upper range.

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Gasoline production, imports, and demand

US weekly gasoline imports fell by ~0.17 MMbpd to 0.77 MMbpd for the week ended May 6, 2016, compared to the previous week. The EIA added that US gasoline production rose by 240,000 bpd (barrels per day) to ~10.1 MMbpd (million barrels per day) for the same period. This was an ~3.7% rise compared to the same period in 2015.

Gasoline demand rose by 156,000 bpd to 9.7 MMbpd for the same period. This is 5.4% more than in the same period in 2015.

Impact of the gasoline inventory

The rise in gasoline demand and exports led to the decline in US gasoline inventory. High gasoline prices benefit US refiners such as Northern Tier Energy (NTI) and Valero (VLO). High crude oil prices benefit upstream players like Comstock Resources (CRK), Swift Energy (SFY), and Stone Energy (SGY).

The uncertainty in crude oil prices affects funds such as the PowerShares DWA Energy Momentum ETF (PXI) and the VelocityShares 3x Inverse Crude Oil ETN (DWTI).

In the final part of this series, we’ll look at US distillate inventories.

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