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How Will the API’s Crude Oil Inventories Impact Oil Prices?


Nov. 20 2020, Updated 4:22 p.m. ET

Crude oil prices 

June WTI (West Texas Intermediate) crude oil (XLE) (XOP) (USO) futures contracts rose 0.47% and were trading at $49.1 per barrel in electronic trade at 6:30 AM EST on May 16, 2017. Prices are at a three-week high because Saudi Arabia and Russia favored extending major producers’ production cut deal beyond 2017.

Broader markets such as the S&P 500 (SPY) (SPX-INDEX) 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 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 such as Marathon Oil (MRO), Warren Resources (WRES), Chevron (CVX), and QEP Resources (QEP).

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API’s crude oil inventories 

On May 16, 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 fallen by 2.3 MMbbls (million barrels) on May 5–12, 2017. A fall in crude oil inventories could support US crude oil (BNO) (PXL) 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 May 12, 2017. The report will be released on May 17, 2017, at 10:30 AM EST.

For the week ending May 5, 2017, the EIA reported that US crude oil inventories fell by 5.2 MMbbls to 522.5 MMbbls. For more information, read US Crude Oil Inventories Post Biggest Draw since December.

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 2.4% below their peak level. US crude oil prices fell ~11% in the past month. Near-record crude oil inventories could pressure crude oil prices. They might also be responsible for the delay in rebalancing the crude oil market despite the major oil producers’ production cut deal.

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


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