Crude oil prices
September WTI (West Texas Intermediate) crude oil futures (SCO) (BNO) (IEZ) contracts fell 0.3% to $49.4 per barrel in electronic trading at 2:10 AM EST on August 3, 2017. Prices are near a two-month high due to the bullish drivers that we discussed in the previous part of the series.
EIA’s crude oil inventories
The EIA (U.S. Energy Information Administration) released its weekly crude oil and gasoline inventory report on August 2, 2017. It reported that US crude oil inventories fell by 1.5 MMbbls (million barrels) or 0.3% to 481.8 MMbbls on July 21–July 28, 2017. Inventories are at the lowest level since December 30, 2016. Inventories fell 2% compared to the same period in 2016.
US crude oil inventories by region
The EIA divides the US into five storage regions. Let’s assess the changes in crude oil inventories on July 21–28, 2017.
- East Coast – rose by 0.1 MMbbls to 15.1 MMbbls
- Midwest – fell by 0.4 MMbbls to 144.5 MMbbls
- Gulf Coast – rose by 1.7 MMbbls to 249.4 MMbbls
- Rocky Mountain – fell by 0.2 MMbbls to 22.1 MMbbls
- West Coast – fell by 2.9 MMbbls to 50.7 MMbbls
Why did US crude oil inventories fall?
US crude oil inventories are below the five-year range due to the following:
- record refinery demand
- a rise in US crude oil exports in 2017
- a fall in US crude oil imports from Saudi Arabia to a seven-year low
Impact of US crude oil inventories
US crude oil inventories have fallen 10% from the peak. The expectation of a fall in US inventories would support crude oil prices. Higher crude oil prices have a positive impact on oil producers such as Stone Energy (SGY) and Denbury Resources (DNR).
In the next part, we’ll look at how US crude oil production drives crude oil prices.