Crude oil prices
February WTI (West Texas Intermediate) crude oil (USO) (UCO) (XOP) (ERY) (USL) (ERY) futures contracts fell 0.5% to $53.7 per barrel in electronic trade at 4:35 AM EST on December 29, 2016. Prices fell due to the API’s (American Petroleum Institute) bearish crude oil inventory report. Prices also fell due to profit-taking after hitting an 18-month high on December 28, 2016.
API’s crude oil inventories
On December 28, 2016, the API (American Petroleum Institute) released its weekly crude oil inventory report. It reported that US crude oil inventories rose by 4,200,000 barrels from December 16–23, 2016. As a result, crude oil prices fell in post-settlement trade on December 28, 2016. For more on crude oil prices and oil producers’ meeting, read Part 1 of this series.
The API added that Cushing crude oil inventories rose by 528,000 MMbbls (million barrels) from December 16–23, 2016. Read Cushing Crude Oil Inventories Could Pressure Crude Oil to learn more.
EIA’s crude oil inventories
The API’s report on Wednesday will be followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report on December 29, 2016. The data will be for the week ending December 23, 2016.
For the week ending December 16, the EIA reported that US crude oil inventories rose by 2.3 MMbbls (million barrels) to 485.4 MMbbls. For more details, read Are US Crude Oil Inventories Bullish or Bearish for Oil Prices?. For more crude oil price drivers in 2017, read What Can Investors Expect in the Crude Oil Market in 2017? and Decoding the World Oil Supply and Demand Gap in 2017.
If the EIA reports a larger-than-expected fall in inventories, it could support crude oil prices. On the other hand, an unexpected rise in US crude oil inventories could pressure crude oil prices.
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. Since then, they fell 10.7% from the all-time highs. Falling inventories would support crude oil prices.
High crude oil prices could have a positive impact on oil and gas producers’ earnings such as Goodrich Petroleum (GDP), Noble Energy (NBL), Apache (APA), Chevron (CVX), and Northern Oil & Gas (NOG), and Stone Energy (SGY).
Volatility in crude oil prices also impacts ETFs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DWA Energy Momentum ETF (PXI), the iShares Global Energy ETF (IXC), the iShares US Energy ETF (IYE), the Fidelity MSCI Energy ETF (FENY), and the United States Brent Oil ETF (BNO).
In the next part of this series, we’ll see how gasoline inventories impact crude oil prices.