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EIA Reported a Surprise Draw in US Gasoline Inventories

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US gasoline inventories 

The EIA (U.S. Energy Information Administration) reported that US gasoline inventories fell by 0.9 MMbbls (million barrels) to 256.2 MMbbls between January 27, 2017, and February 3, 2017. However, US gasoline inventories are at the highest levels since February 2016.

A market survey estimated that US gasoline inventories would have risen by 1.1 MMbbls between January 27, 2017, and February 3, 2017. Gasoline prices rose due to the surprise draw in gasoline inventories on February 8, 2017.

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Bullish momentum in gasoline futures supported crude oil (PXI) (IEZ) (ERY) prices. Volatility in gasoline and crude oil prices impacts oil producers and refiners’ profitability like Western Refining (WNR), Northern Tier Energy (NTI), Bonanza Creek Energy (BCEI), Swift Energy (SFY), and Phillips 66 (PSX). For more on crude oil and gasoline prices, read Part 1 and Part 5 of this series.

Gasoline production, imports, and demand  

US gasoline production rose by 703,000 bpd (barrels per day) to 9,804,000 bpd between January 27, 2017, and February 3, 2017. Production is up 7.7% week-over-week and 2.6% year-over-year. US gasoline imports rose by 323,000 bpd to 811,000 bpd during the same period. Gasoline demand rose by 631,000 bpd to 8,941,000 bpd.

Impact of gasoline inventories  

For the week ending February 3, 2017, US gasoline inventories were 0.2% lower than they were in the same period in 2016. However, US gasoline inventories are above their seasonal 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 Valero (VLO), Tesoro (TSO), and Triangle Petroleum (TPLM).

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

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