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Will the EIA’s Crude Oil Inventories Follow the API’s Data?

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Nov. 20 2020, Updated 12:43 p.m. ET

API’s crude oil inventories  

On March 7, 2017, the API (American Petroleum Institute) released its weekly crude oil inventory report. It reported that US crude oil inventories rose by 11.6 MMbbls (million barrels) between February 24, 2017, and March 3, 2017. The API data show a cumulative build of 35 MMbbls in the last ten weeks. As a result, crude oil (ERX) (FXN) (SCO) (ERY) prices fell in post-settlement trade on March 7, 2017, despite Libya’s crude oil supply outage.

Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Apache (APA), PDC Energy (PDCE), Denbury Resources (DNR), and Triangle Petroleum (TPLM).

The API added that Cushing crude oil inventories rose by 0.8 MMbbls between February 24, 2017, and March 3, 2017. For more on crude oil prices and its drivers, read Part 1 of this series. 

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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 8, 2017. The data will be for the week ending March 3, 2017.

For the week ending February 24, 2017, the EIA reported that US crude oil inventories rose by 1.5 MMbbls to 520.2 MMbbls. Read Why US Crude Oil Inventories Reached a Fresh All-Time High for more details.

Impact of US crude oil inventories 

The API reported a massive rise in US crude oil inventories for the week ending March 3, 2017. If the EIA shows a surprise draw, it could support oil prices. However, a market survey estimates that US crude oil inventories would have risen by 1.9 MMbbls between February 24, 2017, and March 3, 2017. If the EIA reports a larger-than-expected rise in inventories, we could see collateral damage in crude oil prices. It could overshadow OPEC’s output cut deal in the short term.

Meanwhile, 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 pressure crude oil (USO) (DIG) prices.

In the next part of this series, we’ll see how gasoline inventories impact crude oil prices.

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