US gasoline inventories
According to the EIA (U.S. Energy Information Administration), US gasoline inventories rose by 44,000 barrels to 210.4 MMbbls (million barrels) between November 10 and 17, 2017. However, gasoline inventories were 13.5 MMbbls (6.1%) lower than in the same period in 2016.
The market estimated that US gasoline inventories would rise by 737,000 barrels between November 10 and 17, 2017. US gasoline futures fell 0.3% to $1.76 per gallon on November 22, 2017, due to the rise in inventories. Whereas gasoline futures usually move with crude oil (DWT) (USL) futures, they diverged on November 22, 2017.
US gasoline production and demand
US gasoline production rose by 580,000 bpd (barrels per day) to 10.4 million bpd between November 10 and 17, 2017, 732,000 bpd (7.5%) higher than in the same period in 2016. US gasoline demand rose 423,000 bpd to 9.6 million bpd between November 10 and 17, 2017, 571,000 bpd (6.3%) higher than in the same period in 2016. A rise in gasoline demand is bullish for gasoline and crude oil prices.
Higher gasoline prices benefit US refiners (CRAK) such as HollyFrontier (HFC), CVR Energy (CVI), and Western Refining (WNR). Similarly, higher oil prices benefit oil energy producers (FENY) (IYE) such as Pioneer Natural Resources (PXD), Newfield Exploration (NFX), Occidental Petroleum (OXY), and Energen (EGN).
Impact of lower gasoline inventories
US gasoline inventories have fallen ~20% from their peak in February 10, 2017, when US gasoline prices were up 14% and US crude oil prices were up ~4%. The upside for oil has been limited due to bearish factors, which we’ve covered previously in this series. Any fall in gasoline inventories is bullish for gasoline and crude oil prices. Next, we’ll cover US distillate inventories.