US distillate inventories
The EIA (U.S. Energy Information Administration) reported that US distillate inventories rose by 0.3 MMbbls (million barrels) to 148.9 MMbbls from November 4–11, 2016. US distillate inventories rose for the first time in eight weeks. US distillate inventories hit six-year seasonal highs of 165 MMbbls for the week ending September 9, 2016.
A market survey estimated that distillate inventories would fall by 1.7 MMbbls for the same period. Diesel futures fell on November 16, 2016, due to the unexpected rise in distillate inventories. For more on crude oil and diesel fuel prices, read Part 1 and Part 9 of this series.
US distillate inventories are 6.1% higher than they were in the same period in 2015. They’re also above their upper range for the last five years.
Distillate production and demand
US distillate production rose by 200,000 bpd (barrels per day) to 4,984,000 bpd from November 4–11, 2016. US distillate imports rose by 62,000 bpd to 169,000 bpd for the same period. Weekly distillate demand fell by 99,000 bpd to 3,944,000 bpd for the same period.
Impact on stocks and ETFs
A surprise rise in distillate inventories could pressure diesel fuel and heating oil prices. For more on diesel and heating oil prices, read Part 9 of this series.
Lower diesel fuel prices can have a negative impact on US refiners and crude oil producers’ earnings like Valero Energy (VLO), Triangle Petroleum (TPLM), Tesoro (TSO), Northern Tier Energy (NTI), and Synergy Resources (SYRG).
The rollercoaster ride in crude oil and refined products prices can impact funds such as the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the iShares Global Energy ETF (IXC), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the First Trust Energy AlphaDEX Fund (FXN), the Direxion Daily Energy Bear 3x (ERY), 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 2H16, Winners and Losers in Energy after the US Election Results, and How Asia’s Crude Oil Imports Impact the Crude Oil Market for more on crude oil.
Read Contango Market and OPEC: Will They Impact Crude Oil Prices?, Jim Rogers and the US Election: Will Crude Oil Prices Crash?, 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.