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US Gasoline Inventories: More Pain for Crude Oil Prices?

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Weekly US gasoline inventories   

US gasoline inventories increased by 3.6 MMbbls (million barrels) or 1.5% to 241 MMbbls on January 5–12, 2018, according to the EIA. However, inventories declined by 5.4 MMbbls or 2.2% from a year ago.

Analysts expected that US gasoline inventories would have increased by 3.4 MMbbls on January 5–12, 2018. Gasoline futures (UGA) rose 1.4% to $1.88 per gallon on January 18, 2018. US crude oil (DWT) (USO) and gasoline futures diverged on January 18, 2018.

US crude oil (UCO) (SCO) prices are near a three-year high. It benefits energy producers (VDE) (XOP) like Whiting Petroleum (WLL), Newfield Exploration (NFX), Parsley Energy (PE), and Energen (EGN).

Moves in gasoline prices impact US refining (CRAK) companies like Holly Frontier (HFC), Phillips 66 (PSX), and PBF Energy (PBF).

US gasoline production and demand   

The EIA estimates that US gasoline production increased by 185,000 bpd (barrels per day) or 2% to 9,710,000 bpd on January 5–12, 2018. The production also increased by 757,000 bpd or 8.5% YoY (year-over-year).

US gasoline demand decreased by 146,000 bpd to 8,668,000 bpd on January 5–12, 2018. However, demand increased by 599,000 bpd or 7.4% YoY. The YoY rise in gasoline demand has a positive impact on gasoline and oil (UWT) prices.

Impact 

US gasoline inventories increased for the tenth straight week. They rose by 31.4 MMbbls or 15% during this period. If the momentum continues in 2018, it could pressure gasoline and oil (UCO) prices.

US gasoline inventories are ~0.4% above their five-year average. If the difference increases, it’s a bearish sign for gasoline (UGA) and oil (DWT) prices.

Next, we’ll discuss US distillate inventories.

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