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Gasoline Inventories and Consumption Impact Crude Oil Prices

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Nov. 20 2020, Updated 3:39 p.m. ET

Record gasoline inventories 

The EIA (U.S. Energy Information Administration) reported that US gasoline inventories rose by 2.8 MMbbls (million barrels) to 259.1 MMbbls from February 3–10, 2017. US gasoline inventories are at the highest levels ever.

Record gasoline inventories would pressure gasoline and crude (BNO) (PXI) (USO) (UCO) oil prices. Lower crude oil prices would have a positive impact on oil producers such as Northern Oil & Gas (NOG), Bill Barrett (BBG), Marathon Oil (MRO), Continental Resources (CLR), Bonanza Creek Energy (BCEI), and Cobalt International Energy (CIE). For more on crude oil prices, read Part 1 in this series.

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US gasoline consumption

The EIA estimated that four-week average US gasoline demand fell by 39,000 bpd (barrels per day) to 8,222,000 bpd from January 20–27, 2017. In January, US gasoline consumption fell to almost a 15-year low. However, four-week average US gasoline demand rose by 910,000 bpd to 8,431,000 bpd from February 3–10, 2017.

Oil Price Information Service reported that gasoline sales at the pump fell 4.4% in January 2017—compared to January 2016. Slowing gasoline demand is bearish for gasoline and crude oil (IXC) (IEZ) (RYE) (BNO) prices.

Impact

Record gasoline inventories and almost 15-year low gasoline demand will pressure gasoline and crude oil (FENY) (SCO) prices in 2017. Lower gasoline and crude oil (VDE) (DIG) prices have a negative impact on refiners and oil producers’ earnings like Tesoro (TSO), Valero (VLO), Phillips 66 (PSX), Comstock Resources (CRK), and Northern Tier Energy (NTI).

Next, we’ll analyze Libya’s crude oil production.

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