23 Nov

The Relationship between US Crude Oil Inventories and Oil Prices

WRITTEN BY Gordon Kristopher

Estimates for US crude oil inventories 

The EIA (U.S. Energy Information Administration) released its Weekly Petroleum Status Report on November 22, 2017. It reported that US crude oil inventories fell 1.9 MMbbls (million barrels) to 457.1 MMbbls between November 10 and 17, 2017. Inventories were 31.8 MMbbls (6.5%) lower than in the same period in 2016.

The market anticipated that US oil inventories would fall 1.5 MMbbls between November 10 and 17, 2017. The larger-than-expected fall pushed oil (UWT) (DWT) prices higher on November 22, 2017.

The Relationship between US Crude Oil Inventories and Oil Prices

WTI (West Texas Intermediate) oil prices have reached a high last seen in June 2015. Oil price volatility impacts oil producers (IEO) (IXC) such as Stone Energy (SGY), BP (BP), ConocoPhillips (COP), Occidental Petroleum (OXY), and Denbury Resources (DNR).

US refinery crude oil demand and imports

US refinery crude oil demand rose 199,000 bpd (barrels per day) to 16,838,000 bpd between November 10 and 17, 2017. Demand was 441,000 bpd (2.6%) higher than in the same period in 2016. Whereas US crude oil imports fell 25,000 bpd to 7,873,000 bpd, they were 295,000 bpd (3.9%) higher than in the same period in 2016.

Impact of US crude oil inventories 

Nationwide crude oil inventories were ~57.3 MMbbls (14.3%) above their five-year average for the week ended November 17, 2017, which will weigh on oil prices. Any fall in US crude oil inventories is bullish for oil (BNO) prices. Next, we’ll analyze how US crude oil production and other factors affect oil prices.

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