Large Fall in Gasoline Inventories Didn’t Support Gasoline Prices

US gasoline inventories  

The EIA (U.S. Energy Information Administration) reported that US gasoline inventories fell by 2.8 MMbbls (million barrels) to 237 MMbbls on May 19–26, 2017. Gasoline inventories fell 1.2% week-over-week and 0.7% year-over-year.

A market survey estimated that inventories would have fallen by 1.1 MMbbls on May 12–19, 2017. Gasoline futures fell 0.7% to $1.58 per gallon on June 1, 2017, despite the larger-than-expected fall in gasoline inventories. However, US crude oil (XES) (RYE) (IEZ) prices rose on the same day.

Large Fall in Gasoline Inventories Didn’t Support Gasoline Prices

Volatility in gasoline and crude oil prices impacts oil and gas producers’ exploration and production companies and refiners’ profitability like Tesoro (TSO), Sanchez Energy (SN), and Goodrich Petroleum (GDP).

Gasoline production, imports, and demand  

US gasoline production rose 1.8% to 10,430,000 bpd (barrels per day) on May 12–19, 2017. Production rose 5.2% during the same period in 2016. US gasoline imports fell 3% to 703,000 bpd on May 12–19, 2017. Imports fell 24%—compared to the same period in 2016. Gasoline demand rose 1.2% to 9,822,000 bpd on May 12–19, 2017. Demand is 1.1% higher than the same period in 2016. For more on gasoline demand, read US Gasoline Demand Could Hit a Peak This Summer. All of these supply and demand factors drive gasoline inventories.

Impact of gasoline inventories 

US gasoline inventories are 8.6% below their all-time high. Inventories fell for the fourth straight week. The expectation of fall in gasoline inventories in the coming months could benefit gasoline and crude oil prices.

In the next part of this series, we’ll take a look at US distillate inventories.