API’s crude oil inventories
On March 21, 2017, the API (American Petroleum Institute) released its weekly crude oil inventory report. It reported that US crude oil inventories fell by 4.5 MMbbls (million barrels) from March 10–17, 2017. It pressured crude oil (ERY) (USL) (ERX) prices in post-settlement trade on March 21, 2017.
The API data showed a cumulative build of 39.1 MMbbls in the last 12 weeks. The API added that Cushing crude oil inventories rose by ~2 MMbbls from March 10–17, 2017. It could pressure crude oil prices to new lows. Prices are trading at a four-month low.
Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Whiting Petroleum (WLL), Swift Energy (SFY), Hess (HES), and Goodrich Petroleum (GDP). For more on crude oil prices and its drivers, read Part 1 and 2 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 March 22, 2017. The data will be for the week ending March 17, 2017.
For the week ending March 10, 2017, the EIA reported that US crude oil inventories fell by 0.2 MMbbls to 528.2 MMbbls. Read US Crude Oil Inventories Fell: Bullish for Crude Oil Prices? for more details.
Impact of US crude oil inventories
A Reuters survey estimates that US crude oil inventories would have risen by 2.8 MMbbls from March 10–17, 2017. If the EIA reports a larger-than-expected rise in inventories, we could see a crash in crude oil prices. It could overshadow OPEC’s output cut deal in the short term.
Meanwhile, US crude oil inventories have risen by ~50 MMbbls, or 9.1%, in the last 11 weeks. Crude oil prices fell ~10% during this period. Near-record crude oil inventories could pressure crude oil (USO) (PXI) prices.
In the next part of this series, we’ll see how gasoline inventories impact crude oil prices.
The EIA estimated that four-week average US gasoline demand rose by 205,000 bpd (barrels per day) to 8,968,000 bpd from March 3–10, 2017.
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