5 Apr

Will Gasoline Inventories Boost US Crude Oil Prices?

WRITTEN BY Gordon Kristopher

API’s gasoline inventories 

The API (American Petroleum Institute) released its weekly inventory report on April 4, 2017. It estimated that US gasoline inventories fell by 2.56 MMbbls (million barrels) from March 24–31, 2017. US distillate inventories also fell by 2.1 MMbbls during the same period.

A market survey estimates that US gasoline inventories could have fallen by 1.4 MMbbls from March 24–31, 2017. US distillate inventories could have fallen by 1.2 MMbbls during the same period.

Moves in refined product inventories also impact crude oil (IXC) (USL) (IEZ) prices. A larger-than-expected fall in gasoline and distillate inventories is bullish for gasoline prices. When gasoline prices rise, it can impact refiners’ crude oil demand, which supports crude oil prices. For more on crude oil prices and drivers, read Part 1 and Part 2 of this series.

Will Gasoline Inventories Boost US Crude Oil Prices?

Volatility in gasoline and crude oil prices could impact refiners and oil producers’ earnings like Western Refining (WNR), Valero (VLO), Marathon Petroleum (MPC), Denbury Resources (DNR), and Goodrich Petroleum (GDP).

EIA’s gasoline inventories 

On April 5, 2017, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending March 31, 2017.

For the week ending March 24, 2017, the EIA reported that US gasoline inventories fell by 3.7 MMbbls to 239.7 MMbbls. US distillate inventories also fell by 2.5 MMbbls to 152.9 MMbbls for the same period.

Impact  

A larger-than-expected fall in gasoline and distillate inventories could support gasoline and crude oil (XOP) (UCO) (ERY) prices. However, a rise in inventories could pressure gasoline and crude oil prices.

In the next part of this series, we’ll take a look at gasoline demand. We’ll discuss how it impacts gasoline and crude oil prices.

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