Crude oil prices  

June WTI (West Texas Intermediate) crude oil (USO) (UCO) (XLE) futures contracts fell 0.75% to $49.2 per barrel in electronic trading at 3:35 AM EST on April 27, 2017. Prices are near four-week lows. However, 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.

Volatility in crude oil prices impacts oil and gas producers’ earnings like Denbury Resources (DNR), ExxonMobil (XOM), Warren Resources (WRES), and QEP Resources (QEP). For more on crude oil prices and drivers, read Part 1 of this series.

Large Draw in US Crude Oil Inventories Supported Oil Prices

EIA’s crude oil inventories 

The EIA (U.S. Energy Information Administration) reported that US crude oil inventories fell by 3.6 MMbbls (million barrels) to 528.7 MMbbls on April 14–21, 2017. US crude oil inventories fell 0.7% week-over-week, but rose 3.8% year-over-year.

A market survey estimated that US crude oil inventories would have fallen by 1.6 MMbbls on April 14–21, 2017. US crude oil (USL) (DIG) (DTO) futures rose due to the larger-than-expected rise in US crude oil inventories on April 26, 2017. For more on crude oil prices, read Part 1 in this series. In Part 4, we’ll see why US crude oil inventories fell.

Impact of US crude oil inventories 

US crude oil inventories hit 535.5 MMbbls for the week ending March 31, 2017—the highest level ever. Inventories are 1.3% below their peak level. They’re also above the five-year range. US crude oil inventories have risen by ~50 MMbbls, or ~9.3%, in the last 17 weeks. Crude oil prices fell ~6% during this period. Near-record crude oil inventories could pressure crude oil (IXC) (IEZ) prices. US crude oil inventories are the second-biggest bearish catalyst for crude oil prices after the US crude oil output.

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

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