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API’s Crude Oil Inventories Could Support Crude Oil

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API’s crude oil inventories  

On July 18, 2017, the API (American Petroleum Institute) will release its weekly crude oil inventory report. The API’s report will be followed by the EIA’s (U.S. Energy Information Administration) weekly petroleum status report at 10:30 AM EST on July 19, 2017.

A market survey estimates that US crude oil inventories would have fallen by 3.7 MMbbls (million barrels) on July 7–14, 2017. US crude oil inventories and crude oil prices are inversely related, as you can see in the following chart. Any fall in inventories could support oil (USO) (PXI) (USL) prices.

Higher crude oil prices have a positive impact on oil and gas producers such as Continental Resources (CLR), Denbury Resources (DNR), Chesapeake Energy (CHK), and Bonanza Creek Energy (BCEI).

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Gasoline and distillate inventories estimates

A market survey estimates that US gasoline inventories would have fallen by 1.03 MMbbls on July 7–14, 2017. However, distillate inventories would have risen by 1.3 MMbbls during the same period.

Crude oil stored in tankers

Meanwhile, crude oil and its products stored in tankers are declining in Southeast Asia. According to Reuters, some traders said that they might not renew contracts with crude oil tankers due to the rise in demand for crude oil and its products in the near term. The improving refining capacity and summer season drive the demand for crude oil. For more on crude oil stored in tankers, read Crude Oil Storage in Tankers Hit a 2017 High.

Impact  

US crude oil inventories have fallen by ~34 MMbbls in the last ten weeks. A larger-than-expected fall in US crude oil and gasoline inventories could benefit crude oil prices this week. The expectation of a fall in crude oil stored in tankers could also benefit oil prices.

In the next part, we’ll look at how OECD crude oil inventories impact crude oil prices.

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