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Oil Traders Focus on US Crude Oil Inventories

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Crude oil prices 

March WTI (West Texas Intermediate) crude oil (USO) (UCO) (IYE) (XOP) futures contracts fell 0.2% to $52.7 per barrel in electronic trade at 12:20 AM EST on February 1, 2017. Crude oil prices fell due to the API’s (American Petroleum Institute) bearish crude oil inventory report.

Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Noble Energy (NBL), SM Energy (SM), Apache (APA), and Northern Oil & Gas (NOG).

API’s crude oil inventories 

On January 31, 2017, the API (American Petroleum Institute) released its weekly crude oil inventory report. It reported that US crude oil inventories rose by 5.8 MMbbls (million barrels) from January 20–27, 2017. As a result, crude oil (FENY) (BNO) (XLE) (IEZ) prices fell in post-settlement trade on January 31, 2017. The API added that Cushing crude oil inventories fell by 0.9 MMbbls from January 20–27, 2017. For more on crude oil prices and its drivers, read Part 1 of this series. 

EIA’s crude oil inventories  

The API’s report will be followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report on February 1, 2017. The data will be for the week ending January 27, 2017.

For the week ending January 20, 2017, the EIA reported that US crude oil inventories rose by 2.8 MMbbls (million barrels) to 488.3 MMbbls. Read How Do US Crude Oil Inventories Impact Crude Oil Prices? for a regional breakdown of crude oil inventories.

A market survey estimates that US crude oil inventories could have risen by ~3.3 MMbbls from January 20–27, 2017. If the EIA reports a larger-than-expected rise in inventories, it could pressure crude oil prices. On the other hand, an unexpected fall in US crude oil inventories could support 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 have fallen 10.2% from their all-time highs. Falling inventories could support crude oil prices. Crude oil prices rose 15% during this period.

In the next part of this series, we’ll see how gasoline inventories impact crude oil prices.

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