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US Crude Oil Inventories and Oversupply Concerns

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Nov. 20 2020, Updated 4:06 p.m. ET

API’s crude oil inventories 

The API (American Petroleum Institute) released its weekly crude oil inventory report on June 20, 2017. It estimated that US crude oil inventories fell by 2.7 MMbbls (million barrels) on June 9–16, 2017.

Crude oil (USO) (IEZ) (USL) prices fell despite the better-than-expected fall in US crude oil inventories in post-settlement trade on June 20, 2017. US crude oil prices are trading near a nine-month low. For more on bearish drivers, read the previous part of the series. Lower crude oil prices have a negative impact on oil and gas producers’ earnings like ConocoPhillips (COP), Noble Energy (NBL), Stone Energy (SGY), and Denbury Resources (DNR).

The API added that gasoline and distillate inventories rose by 0.34 MMbbls and 1.84 MMbbls, respectively, on June 9–16, 2017.

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EIA’s crude oil inventories  

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on June 21, 2017. Market surveys estimated that US crude oil inventories would have fallen by 2 MMbbls on June 9–16, 2017. If the EIA reports a massive draw, it could support oil prices. However, the expectation of a rise in US gasoline and distillate inventories on June 9–16, 2017, could pressure oil prices.

US and OECD crude oil inventories

US crude oil inventories are above the five-year average. Morgan Stanley estimates that crude oil and product inventories rose by 1 MMbpd in 2Q17 in the OECD (Organisation for Economic Cooperation and Development), China, and some non-OECD countries. High US and OECD crude oil inventories would pressure oil prices.

In the next part of this series, we’ll analyze gasoline demand.

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