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Surprise Build in US Crude Oil Inventories Hurt Oil Prices

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Nov. 20 2020, Updated 10:56 a.m. ET

Crude oil prices 

July US crude oil (UCO) (VDE) (RYE) futures contracts fell 0.1% to $45.5 per barrel in electronic trade at 1:55 AM EST on June 2, 2017. Prices are near the levels in August 2016. They also fell ~11.1% after OPEC’s successful meeting. Lower crude oil prices have a negative impact on oil producers like Warren Resources (WRES), Comstock Resources (CRK), and QEP Resources (QEP). 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) released its weekly crude oil report on June 7, 2017. It reported that US crude oil inventories rose by 3.3 MMbbls (million barrels) to 513.2 MMbbls between May 26, 2017, and June 2, 2017. Market surveys projected that US crude oil inventories could have fallen by 3.5 MMbbls for the same period. A surprise build in inventories pressured crude oil prices on June 7, 2018. Prices (BNO) (SCO) (PXI) fell 5.1% on June 7, 2017—the biggest fall since March 8, 2017.

US crude oil inventories by region

The EIA divides the US into five storage regions. Let’s assess changes in crude oil inventories between May 26, 2017, and June 2, 2017.

  • East Coast – rose by 1.2 to 16.7 MMbbls
  • Midwest – fell by 0.5 MMbbls to 157.9 MMbbls
  • Gulf Coast – rose by 3.4 MMbbls to 259.3 MMbbls
  • Rocky Mountain – fell by 0.2 MMbbls to 23.6 MMbbls
  • West Coast – fell by 0.6 MMbbls to 55.8 MMbbls 

Impact of US crude oil inventories  

The expectation of slowing inventories in the coming months could support oil prices. Read Analyzing Saudi Arabia’s Crude Oil Export Plans and Are OECD and US Crude Oil Inventories Seeing a Change in Momentum? to learn more. The rise in US crude oil exports could also lead to the fall in US crude oil inventories.

In the next part, we’ll look at weekly and monthly US crude oil production.

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