Will API and US Crude Oil Inventories Drive Prices Higher?

API’s crude oil inventories  

On June 27, 2017, the API (American Petroleum Institute) released its weekly crude oil inventory report. It estimated that US crude oil inventories rose by 0.851 MMbbls (million barrels) on June 16–23, 2017. The API estimated that US crude oil inventories have risen by ~15 MMbbls so far in 2017.

The surprise build in US crude oil inventories pressured (XLE) (SCO) (BNO) US crude oil prices in post-settlement trade on June 27, 2017.

Likewise, gasoline and distillate inventories rose by 1.31 MMbbls and 0.67 MMbbls, respectively, on June 16–23, 2017. Higher inventories also pressured crude oil prices.

Will API and US Crude Oil Inventories Drive Prices Higher?

Crude oil prices are trading near a ten-month low. Lower crude oil prices have a negative impact on oil producers’ profitability like Northern Oil & Gas (NOG), Matador Resources (MTDR), SM Energy (SM), and Goodrich Petroleum (GDP).

EIA’s crude oil inventories

The EIA (U.S. Energy Information Administration) will release its petroleum status report at 10:30 AM EST on June 28, 2017.

Market surveys estimate that US crude oil inventories would have fallen by 2.3 MMbbls and 3.25 MMbbls on June 16–23, 2017. If the EIA reports a surprise build like the API, we could see collateral damage in crude oil prices.

US gasoline and distillate inventories 

US crude oil inventories are above the five-year average. Likewise, gasoline and distillate inventories are above the five-year average. Global crude oil inventories are also above the five-year average. The rise in US crude oil exports and high floating storage inventories would weigh on crude oil prices in the short term.

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