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Oversupply Concerns: API and EIA’s Crude Oil Inventories

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API’s crude oil inventories 

On May 9, 2017, the API (American Petroleum Institute) released its weekly crude oil inventory report. It reported that US crude oil inventories fell by 5.8 MMbbls (million barrels) between April 28, 2017, and May 5, 2017. The massive fall in crude oil inventories supported US crude oil (IXC) (FENY) (IYE) prices in post-settlement trade on May 9, 2017. However, prices are trading near a five-month low.

Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Contango Oil & Gas (MCF), Hess (HES), Stone Energy (SGY), and Cobalt International Energy (CIE).

The API added that Cushing crude oil inventories fell by 0.13 MMbbls between April 28, 2017, and May 5, 2017. For more on crude oil prices and drivers, read Part 1 and 2 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 May 10, 2017. The data will be for the week ending May 5, 2017.

For the week ending April 28, 2017, the EIA reported that US crude oil inventories fell by 0.9 MMbbls to 527.8 MMbbls. Read US Crude Oil Inventories Are above Their 5-Year Average for more details. 

Impact of US crude oil inventories 

A Bloomberg survey estimates that US crude oil inventories would have fallen by 2 MMbbls between April 28, 2017, and May 5, 2017. If the EIA reports a larger-than-expected fall in inventories, it would support crude oil (XLE) (USO) (XOP) prices. In contrast, if it reports a surprise build, it could pressure oil prices. It could overshadow OPEC’s output cut deal in the short term.

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

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