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API Reported a Large Build in US Crude Oil Inventories

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Crude oil futures  

WTI crude oil futures contracts for March delivery fell 0.2% to $59.19 per barrel on February 13, 2018—the lowest settlement since December 22, 2017.

The United States Oil ETF (USO) fell 0.2% to 11.8 on February 13, 2018, while the ProShares Ultra Bloomberg Crude Oil ETF (UCO) fell 0.1% to 22.6 on the same day. These ETFs follow crude oil futures.

Crude oil prices fell on February 13, 2018, due to the expectation of a rise in US crude oil production and inventories.

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On February 13, 2018, the IEA reported that massive growth in US crude oil production in 2018 could offset ongoing supply cuts. US crude oil production is expected to average 10.4 MMbpd (million barrels per day) in 2018, according to the IEA. Crude oil production could cause oversupply in the oil market again. Oversupply concerns pressured oil prices on February 13, 2018.

The Energy Select Sector SPDR Fund (XLE) fell 0.4% on February 13, 2018, while US crude oil prices declined 0.2% on the same day. XLE has exposure to oil and gas companies. US oil prices have declined 10.5% since January 26, 2018, while XLE has dropped 13% during the same period.

API’s crude oil inventories

On February 13, 2018, the API (American Petroleum Institute) released its crude oil inventory report. The API reported that US crude oil inventories increased by 3.9 MMbbls (million barrels) on February 2–9, 2018. Analysts estimate that US crude oil inventories could have increased by 2.8 MMbbls during the same period.

A larger-than-expected increase in US oil inventories reported by the EIA could pressure oil prices. The rise in US crude oil production could also pressure oil prices in upcoming sessions. However, the weak US dollar could support oil prices. The US dollar is near a three-year low.

Series overview  

In this series, we’ll discuss US gasoline inventories and gasoline demand. We’ll also discuss OECD crude oil inventories and some crude oil price forecasts.

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