US crude oil inventories
On November 2, 2017, the EIA (U.S. Energy Information Administration) published its weekly crude oil inventory report. It estimates that nationwide crude oil inventories fell by 2,435,000 barrels to 454.9 MMbbls (million barrels) on October 20–27, 2017. The inventories are near a two-year low. The inventories fell 0.5% week-over-week and by 27.6 MMbbls or 5.7% year-over-year.
The market anticipated that US crude oil inventories would have fallen by 1,756,000 barrels on October 20–27, 2017. US crude oil (DBO) (UWT) (DWT) prices rose on November 2, 2017, due to the larger-than-expected fall in US crude oil inventories.
US crude oil (USO) (DBO) prices are at a 28-month high. They have risen 10.3% in the past month due to several bullish drivers discussed in Part 1 of this series. Energy producers (IXC) (IEO) (OIH) like Occidental Petroleum (OXY), Noble Energy (NBL), Stone Energy (SGY), and Cobalt International Energy (CIE) benefit from higher oil prices.
US crude oil inventories by region
The EIA divides the US into five storage regions. Let’s see the changes in crude oil inventories on October 20–27, 2017.
- East Coast inventories rose by 1.5 MMbbls to 14.8 MMbbls.
- Midwest inventories rose by 1.1 MMbbls to 150.8 MMbbls.
- Gulf Coast inventories fell by 6.8 MMbbls to 217 MMbbls.
- Rocky Mountain inventories rose by 0.3 MMbbls to 20.6 MMbbls.
- West Coast inventories rose by 1.4 MMbbls to 51.6 MMbbls.
Impact of US crude oil inventories
The nationwide crude oil inventories fell 15% from their peak in March 2017, which is bullish for oil (DTO) (SCO) prices. However, inventories are 15% above their five-year average for the week ending October 27, 2017. It would cap the upside for oil (BNO) (USL) prices.
Next, we’ll discuss how non-OPEC and US crude oil production impacts oil prices.