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US Crude Oil Inventories Could Hit a New Record

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Crude oil prices  

April WTI (West Texas Intermediate) crude oil (ERY) (FXN) (ERX) futures contracts fell 0.2% and were trading at $53.1 per barrel in electronic trade at 1:45 AM EST on March 7, 2017. Prices are trading near a 20-month high. Likewise, broader markets such as the S&P 500 (SPY) (SPX-INDEX) and the Dow Jones Industrial Average are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. The US is the largest crude oil consumer. For more on crude oil prices, read Part 1 of this series.

Higher crude oil prices have a positive impact on oil and gas producers’ earnings like Northern Oil & Gas (NOG), ExxonMobil (XOM), Marathon Oil (MRO), and Stone Energy (SGY).

API’s crude oil inventories  

On March 7, 2017, the API (American Petroleum Institute) will release its weekly crude oil inventory report. A market survey estimates that US crude oil inventories could have risen by 1.66 MMbbls between February 24, 2017, and March 3, 2017. US crude oil inventories are at an all-time high. A rise in crude oil inventories to a new record could pressure US crude oil (USO) (SCO) (RYE) prices.

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 for the week ending March 3, 2017. The report will be released on March 8, 2017, at 10:30 AM EST.

For the week ending February 24, 2017, the EIA reported that US crude oil inventories rose by 1.5 MMbbls (million barrels) 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   

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 (USO) (IEZ) prices. Record crude oil inventories are responsible for the delay in rebalancing the crude oil market despite major oil producers’ production cut deal.

In the next part of this series, we’ll look at how OPEC’s crude oil production impacts crude oil prices.

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