US distillate inventories 

The EIA (U.S. Energy Information Administration) reported that US distillate inventories fell by 2.4 MMbbls (million barrels) to 160.7 MMbbls between September 23 and September 30, 2016. US distillate inventories fell for the second straight week from their six-year seasonal highs.

A market survey estimated that distillate inventories would fall by 700,000 barrels for the same period. Diesel futures rose due to a larger-than-expected fall in distillate inventories on October 5, 2016. For more on diesel futures, read part nine of this series. US distillate inventories are 7.7% higher than in the corresponding period in 2015. They’re also above their upper range for the last five years.

US Distillate Inventories off 6-Year Seasonal Highs for 2nd Week

Distillate production and demand  

US distillate production rose by 4,000 bpd (barrels per day) to 4,713,000 bpd between September 23 and September 30, 2016. US distillate imports fell by 41,000 bpd to 103,000 bpd for the same period. Weekly distillate demand rose by 103,000 bpd to 3,875,000 bpd for the same period.

Impact on stocks and ETFs

High distillate inventories for this time of the year could pressure diesel fuel and heating oil prices. For more on diesel prices, read part nine of this series. Lower diesel fuel prices can have a negative impact on the earnings of US refiners and crude oil producers like Valero Energy (VLO), Northern Tier Energy (NTI), Goodrich Petroleum (GDP), Comstock Resources (CRK), and Synergy Resources (SYRG).

The ups and downs in oil and refined products prices affect funds such as the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x (ERY), the iShares Global Energy ETF (IXC), the United States Gasoline Fund (UGA), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

Read Saudi Arabia: Weather Will Be a Key Demand Driver of Oil in 2H16Are Global Supply Outages Bullish or Bearish for Crude Oil Market, and India’s Crude Oil Imports Hit a 7-Year High for more on crude oil.

Read Standard & Poor’s Revised Its Forecast for US Crude Oil Prices and Will Crude Oil Prices Test 3 Digits Again? to learn about crude oil price forecasts.

For ongoing analysis, visit Market Realist’s Upstream Oil and Gas page.

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