API crude oil inventories
The API (American Petroleum Institute) released its weekly crude oil inventory report on June 1, 2016. The report showed that US crude oil inventories rose by 2.4 MMbbls (million barrels) for the week ending May 27—compared to the previous week. Bloomberg surveys projected that crude oil inventories fell by 2.5 MMbbls for the same period. The API added that Cushing crude oil inventories fell by 1.0 MMbbls for the same period. Market data intelligence company Genscape reported that crude oil inventories in Cushing fell by 687,000 barrels for the same period. For more on Cushing crude oil inventories, read Why Cushing Crude Oil Inventories Could Pressure Crude Prices. The fall in crude oil inventories will support crude oil prices.
EIA’s crude oil inventories
API data are followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report. The EIA is scheduled to release its weekly petroleum status report on June 2, 2016. It reported that US crude oil inventories fell by 4.2 MMbbls to 537.1 MMbbls between May 13 and May 20, 2016. It was the steepest decline in US crude oil inventories in the last seven weeks.
Impact of nationwide crude oil inventories
Total crude oil inventories hit an all-time high of 543.6 MMbbls for the week ending April 29, 2016. Near-record inventories will limit the upside for crude oil prices. US crude oil inventories are 12% more than the same period in 2015. US crude oil inventories are more than 100 MMbbls above their five-year average. This could also limit the upside for crude oil prices.
The ups and downs in crude oil prices impact upstream players like WPX Energy (WPX), CONSOL Energy (CNX), Swift Energy (SFY), and Sanchez Energy (SN). For more information on US energy companies’ financial woes, read North American Oil and Gas Producers’ Debt Rose in 2015 and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.
The volatility in crude oil prices also influences ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the ProShares Ultra Bloomberg Crude Oil (UCO), and the United States Brent Oil ETF (BNO).
In the next part of this series, we’ll look at gasoline and distillate inventories.