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Why US Crude Oil Inventories Reached a Fresh All-Time High

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Crude oil prices  

April West Texas Intermediate crude oil (ERX) (FXN) (ERY) futures contracts fell 0.8% to $53.4 per barrel in electronic trading at 4:50 AM EST on March 2, 2017. Prices fell due to the bearish US crude oil inventories report. However, prices are trading near a 19-month high. Likewise, broader markets like the S&P 500 (SPY), Dow Jones, and NASDAQ are at all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices.

Volatility in crude oil prices impacts oil and gas producers’ earnings like Noble Energy (NBL), Continental Resources (CLR), Stone Energy (SGY), W&T Offshore (WTI), and Denbury Resources (DNR). For more on crude oil prices and drivers, read Part 1 of this series.

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EIA’s crude oil inventories  

The EIA (U.S. Energy Information Administration) reported that US crude oil inventories rose by 1.5 MMbbls (million barrels) to 520.2 MMbbls from February 17–24, 2017. US crude oil inventories rose 0.3% week-over-week and 7% year-over-year. US crude oil inventories are at a fresh all-time high.

Wall Street Journal survey estimated that US crude oil inventories would have risen by 2.4 MMbbls from February 17–24, 2017. Record US crude oil inventories pressured crude oil (FXN) (VDE) (DIG) prices on March 1, 2017. US crude oil inventories are above their five-year range. They have also been keeping a lid on crude oil prices. For more on crude oil prices, read Part 1 in this series. In Part 4, we’ll see why US crude oil inventories rose.

Impact of US crude oil inventories  

US crude oil inventories have risen by ~42.1 MMbbls, or 8.6%, in the last nine weeks. Crude oil prices fell ~1% during this period. Record crude oil inventories could put a lid on crude oil (XES) (PXI) prices.

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

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