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US Crude Oil Inventories Are above Their 5-Year Average

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Crude oil prices 

June WTI (West Texas Intermediate) crude oil (IEZ) (XES) (VDE) futures contracts fell 0.7% to $47.49 per barrel in electronic trading at 5:55 AM EST on May 4, 2017. Prices are near six-week lows. However, broader markets like the S&P 500 (SPY) and NASDAQ 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.

Moves in crude oil prices impact oil and gas producers’ earnings like Swift Energy (SFY), Hess (HES), Chevron (CVX), and SM Energy (SM). For more on crude oil prices and drivers, read Part 1 of this series.

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EIA’s crude oil inventories  

The EIA (U.S. Energy Information Administration) reported that US crude oil inventories fell by 0.9 MMbbls (million barrels) to 527.8 MMbbls on April 21–28, 2017. US crude oil inventories fell 0.2% week-over-week, but rose 3.1% year-over-year.

A market survey estimated that US crude oil inventories would have fallen by 2.3 MMbbls on April 21–28, 2017. US crude oil (DIG) (USO) (UCO) futures rose due to the fall in US crude oil inventories on May 3, 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 1.4% below their peak level. They’re also above the five-year range. US crude oil inventories have risen by ~49 MMbbls, or ~9%, in the last 18 weeks. Crude oil prices are down ~11% during this period. Near-record crude oil inventories could pressure crude oil prices. US crude oil inventories are the second-biggest bearish catalyst for crude oil prices after US crude oil production.

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

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