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Record US Crude Oil Inventories versus the US Dollar

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Crude oil prices 

West Texas Intermediate crude oil (IYE) (RYE) (IXC) futures contracts for May delivery rose 0.8% to $48 per barrel in electronic trading at 4:25 AM EST on March 28, 2017. Prices rose due to short covering after hitting almost a four-month low on March 27, 2017. A weak US dollar (UUP) could also support crude oil prices. The US dollar fell ~5% from its recent 14-year high.

Meanwhile, broader markets like the S&P 500 (SPY) and Dow Jones are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. The US is the largest oil consumer.

Moves in crude oil prices impact oil and gas producers’ earnings like Noble Energy (NBL), Continental Resources (CLR), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM). For more on crude oil prices and drivers, read Part 1 of this series.

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API and EIA’s crude oil inventories 

On March 28, 2017, the API (American Petroleum Institute) will release its weekly crude oil inventory report. The API’s report will be followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report for the week ending March 24, 2017. The report will be released on March 29, 2017, at 10:30 AM EST.

For the week ending March 17, 2017, the EIA reported that US crude oil inventories rose by 5 MMbbls (million barrels) to 533.1 MMbbls—the highest level ever.

Impact of US crude oil inventories 

A Bloomberg survey estimates that US crude oil inventories would have risen by 2 MMbbls from March 17–24, 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 ~54 MMbbls in the last 12 weeks. Crude oil prices fell ~12% during this period. Record crude oil inventories could pressure crude oil (UCO) (IEZ) prices. US crude oil inventories are the second-biggest bearish catalyst for crude oil prices after US crude oil production.

In the next part of this series, we’ll take a look at US crude oil production.

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