In the week ended October 27, 2017, the US commercial crude oil stockpiles fell 2.4 MMbbls (million barrels), according to EIA (U.S. Energy Information Administration) data on November 1, 2017. But on the same day, US crude oil prices fell 0.1%.
US crude oil inventories that are above their five-year average could be a bearish factor for oil (DBO) (USL) prices. However, if the difference between US crude oil inventories and their five-year average, or the inventories spread, contracts, it could help oil prices rise.
In the week ended October 27, 2017, the inventories spread fell 1.9 percentage points. In the same week, US crude oil inventories were 14.7% above their five-year average. Since the EIA’s announcement of the inventory data on November 1, 2017, US crude oil prices have risen 5.3%.
As you can see in the above chart, the inventories spread has been on a downward trajectory after the week ended September 22, 2017. Since September 22, 2017, oil prices have risen 12.9%. So if this trend continues, oil (UCO) (BNO) (OIIL) prices could see higher levels.
Based on market estimates, US commercial crude oil stockpiles could fall 2.5 MMbbls in the week ended November 3, 2017. The API (American Petroleum Institute) reported a fall of ~1.6 MMbbls in oil inventories. But only a fall of more than ~4.7 MMbbls could help the inventories spread contract further. If the inventories spread expands again, it could be negative for oil prices. The EIA will release its oil inventory report on November 8, 2017.
On November 7, 2017, the difference between Brent crude oil (BNO) active futures and US crude oil (USO) active futures, or the Brent-WTI (West Texas Intermediate) spread, was $6.50.
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As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
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