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US Gasoline Inventories: Highest Level since July 2016

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US gasoline inventories  

The EIA (U.S. Energy Information Administration) reported that US gasoline inventories rose by 5 MMbbls (million barrels) to 240.7 MMbbls between December 30, 2016, and January 6, 2017. It’s the highest level since July 2016. A larger-than-expected rise in gasoline inventories limited the upside for gasoline prices. February gasoline futures rose 2.6% to $1.6 per gallon on January 11, 2017.

Bullish momentum in crude oil (USO) (UCO) (PXI) (IEZ) (USL) (ERY) prices boosted gasoline prices. For more on crude oil prices, read Part 1 of this series. Moves in gasoline and crude oil prices impact oil producers and refiners’ profitability like Chevron (CVX), Phillips 66 (PSX), ConocoPhillips (COP), Bonanza Creek Energy (BCEI), Northern Tier Energy (NTI), and QEP Resources (QEP).

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Gasoline production, imports, and demand 

US gasoline production rose by 199,000 bpd (barrels per day) to 9,666,000 bpd between December 30, 2016, and January 6, 2017. Production rose 2.1% week-over-week and 10% year-over-year. US gasoline imports fell by 39,000 bpd to 683,000 bpd during the same period. Gasoline demand rose by 5,000 bpd to 8,470,000 bpd during the period. A combination of all of these factors contributed to the massive build in gasoline inventories.

Impact of gasoline inventories   

For the week ending January 6, 2017, US gasoline inventories were 0.1% higher than they were in the same period in 2015. US gasoline inventories were also above the five-year range. High gasoline inventories could pressure gasoline and crude oil prices.

Lower gasoline and crude oil prices could have a negative impact on oil producers and refiners’ profitability like Phillips 66 (PSX), Valero Energy (VLO), ConocoPhillips (COP), and Tesoro (TSO).

In the next part of this series, we’ll take a look at US distillate inventories.

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