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API Crude Inventory Estimates Could Weigh on Crude Oil Prices

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Crude oil prices  

November WTI (West Texas Intermediate) crude oil futures contracts fell 0.3% and were trading at $43.7 per barrel in electronic trade at 5:15 AM EST on September 20, 2016. Prices fell due to expectations of rising US crude oil inventories. For more on crude oil prices, read Part 1 of this series.

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API crude oil inventories  

On September 20, 2016, the API (American Petroleum Institute) will release its weekly crude oil (USO) (UWTI) inventory report. A Reuters survey showed that US crude oil inventories could have risen by 2,300,000 barrels from September 9–16, 2016. An increase in crude oil inventories will pressure US crude oil prices. Lower crude oil prices have a negative impact on oil and gas producers’ earnings such as Synergy Resources (SYRG), EXCO Resources (XCO), and Sanchez Energy (SN).

On September 13, 2016, the API reported that US crude oil inventories rose by 1.4 MMbbls (million barrels) from September 2–9, 2016.

EIA’s crude oil inventories 

Tuesday’s API report will be followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report for the week ending September 16, 2016, on September 21, 2016, at 10:30 AM EST.

For the week ending September 9, 2016, the EIA reported that US crude oil inventories fell by 0.6 MMbbls (million barrels) to 510.8 MMbbls from September 2–9, 2016. For a regional breakdown of crude oil inventories, read Analyzing US Crude Oil Inventories for the Week Ending September 9.

Impact of US crude oil inventories

US crude oil inventories hit an all-time high of 543.6 MMbbls in the week ending April 29, 2016. Near-record global and US crude oil inventories could weigh on crude oil prices. Lower crude oil prices impact oil and gas producers’ earnings like Synergy Resources, EXCO Resources, and Sanchez Energy.

The rollercoaster ride in oil prices also impacts ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the ProShares Ultra Oil & Gas (DIG), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the iShares U.S. Energy ETF (IYE), and the United States Brent Oil ETF (BNO).

In the next part of this series, we’ll take a look at how Russia’s crude oil production impacts the crude oil market.

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