API’s gasoline inventories
The API (American Petroleum Institute) estimates that US gasoline inventories fell by 1.57 MMbbls (million barrels) on September 29–October 6, 2017. A market survey estimated that US gasoline inventories would have fallen by 0.48 MMbbls last week. The larger-than-expected fall in gasoline inventories is bullish for gasoline (UGA) and crude oil (UWT) (USL) prices.
Higher crude oil and gasoline prices have a positive impact on US producers (XLE) (XOP) and refiners (CRAK) like Alon USA Energy (ALJ), CVR Energy (CVI), Sanchez Energy (SN), and Goodrich Petroleum (GDP).
API’s distillate inventories
US distillate inventories rose by 2.03 MMbbls on September 29–October 6, 2017, according to the API. A market survey estimated that US distillate inventories would fall by 2.2 MMbbls last week.
The unexpected rise in distillate inventories is negative for distillates like heating oil and diesel. Heating oil demand usually rises during the winter season. Weakness in distillates prices can have a negative impact on crude oil prices.
EIA’s crude oil and gasoline inventory report
In the EIA’s report last week, US gasoline inventories rose by 1.6 MMbbls to 218.9 MMbbls on September 22–29, 2017. However, US distillate inventories fell by 2.6 MMbbls to 135.4 MMbbls during the same period.
On October 12, 2017, the EIA will release its weekly crude oil inventory report at 11:00 AM EST. If the EIA reports a larger-than-expected fall in US gasoline inventories, it would support crude oil (USO) (OIL) (UCO) and gasoline (UGA) prices. If the EIA reports a larger-than-expected fall in distillate inventories, it would support diesel and crude oil (DBO) (SCO) prices.
In the next part, we’ll analyze how gasoline demand impacts crude oil prices.