US 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.
A market survey estimated that US gasoline inventories would have fallen by 0.8 MMbbls from February 3–10, 2017. Gasoline prices rose despite the surprise rise in gasoline inventories on February 15, 2017. Gasoline and crude oil (PXI) (IEZ) (UCO) (ERY) prices usually move together. Moves in gasoline and crude oil prices impact oil producers and refiners’ profitability like Western Refining (WNR), Denbury Resources (DNR), Bonanza Creek Energy (BCEI), 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 fell by 854,000 bpd (barrels per day) to 8,950,000 bpd from February 3–10, 2017. Production fell 8.7% week-over-week and 7.5% year-over-year. US gasoline imports fell by 207,000 bpd to 604,000 bpd during the same period. Gasoline demand fell by 508,000 bpd to 8,433,000 bpd.
Impact of gasoline inventories
For the week ending February 10, 2017, US gasoline inventories are 0.2% higher than they were in the same period in 2016. US gasoline inventories are above their seasonal five-year range. Record 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), Northern Tier Energy (NTI), Tesoro (TSO), and Northern Oil & Gas (NOG).
In the next part of this series, we’ll take a look at US distillate inventories.