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Will Crude Oil Inventories Push Prices Higher?

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Crude oil prices   

WTI (West Texas Intermediate) crude oil futures contracts for January delivery fell 0.7% and were trading at $51.4 per barrel in electronic trade at 4:45 AM EST on December 6, 2016. Prices fell due to profit booking after hitting a 2016 high on December 5, 2016. For more on crude oil prices and the OPEC meeting, read part one of this series.

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API crude oil inventories  

On December 6, 2016, the API (American Petroleum Institute) will release its weekly crude oil inventory report. A market survey estimates that US crude oil inventories could have fallen 1,132,000 barrels between November 25 and December 2. A fall in crude oil inventories could support US crude oil (UWTI) (ERY) (USL) (RYE) prices.

Higher crude oil prices have a positive impact on the earnings of oil and gas producers like Marathon Oil (MRO), PDC Energy (PDCE), Synergy Resources (SYRG), Comstock Resources (CRK), and Sanchez Energy (SN).

On November 29, 2016, the API reported that US crude oil inventories fell by 717,000 barrels between November 18 and November 25, 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 ended December 2, 2016. The report will be released on December 7, 2016, at 10:30 AM EST.

For the week ended November 25, 2016, the EIA reported that US crude oil inventories fell 884,000 barrels to 488.1 MMbbls (million barrels). For a regional breakdown of crude oil inventories, read US Crude Oil Inventories Supported Crude Oil Prices.

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Impact of US crude oil inventories   

US crude oil inventories hit an all-time high of 543.6 MMbbls in the week ended April 29, 2016. Since then, inventories have fallen 10.2% from their all-time high.

Falling inventories could support crude oil prices. High crude oil prices could have a positive impact on the earnings of oil and gas producers like Marathon Oil (MRO), PDC Energy (PDCE), Synergy Resources (SYRG), Comstock Resources (CRK), and Sanchez Energy (SN).

The roller coaster ride in crude oil and natural gas prices also impacts ETFs and ETNs such as the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Fidelity MSCI Energy ETF (FENY), the Energy Select Sector SPDR ETF (XLE), the ProShares Ultra Oil & Gas (DIG), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the iShares US Energy (IYE), the United States Brent Oil ETF (BNO), and the iShares US Oil Equipment & Services (IEZ).

In the next part of the series, we’ll look at monthly US crude oil production and how it impacts the crude oil market.

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