US gasoline inventories
The EIA (U.S. Energy Information Administration) reported that US gasoline inventories fell by 6.6 MMbbls (million barrels) to 249.3 MMbbls between February 24, 2017, and March 3, 2017. US gasoline inventories hit 259.1 MMbbls for the week ending February 10, 2017—the highest level ever. US gasoline inventories fell 4% from their all-time high.
A market survey estimated that US gasoline inventories would have fallen by 1.4 MMbbls between February 24, 2017, and March 3, 2017. Gasoline prices fell despite a massive fall in gasoline inventories. Bearish momentum in crude oil (XLE) (BNO) (USL) prices pressured gasoline prices on March 8, 2017.
The rollercoaster ride in gasoline and crude oil prices impacts oil producers and refiners’ profitability like Western Refining (WNR), Valero (VLO), Phillips 66 (PSX), Denbury Resources (DNR), and Cobalt International Energy (CIE). 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 rose by 388,000 bpd (barrels per day) to 9,844,000 bpd between February 24, 2017, and March 3, 2017. Production rose 4.1% week-over-week and 2.8% year-over-year. US gasoline imports fell by 215,000 bpd to 242,000 bpd during the same period. Gasoline demand rose by 582,000 bpd to 9,268,000 bpd.
Impact of gasoline inventories
For the week ending March 3, 2017, US gasoline inventories are at the upper range of their five-year range. Near-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 Tesoro (TSO), Northern Tier Energy (NTI), and Bonanza Creek Energy (BCEI).
In the next part of this series, we’ll take a look at US distillate inventories.