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US Gasoline Inventories Rose: Bad News 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 249 MMbbls on February 2–9, 2018, according to the EIA. However, inventories fell by 9.9 MMbbls or 3.8% year-over-year.

Analysts estimated that US gasoline inventories could have increased by 1.2 MMbbls on February 2–9, 2018. US gasoline futures rose on February 14, 2018, despite the larger-than-expected rise in gasoline inventories.

US gasoline futures rose 1.6% to $1.71 per gallon on February 14, 2018. The United States Gasoline ETF (UGA) follows gasoline futures. UGA rose 1.7% to 30.4 on February 14, 2018.

Gasoline and crude oil prices usually move together. US crude oil futures contracts rose 2.4% to $60.60 per barrel on February 14, 2018. The United States Oil ETF (USO) and the United States 12 Month Oil Fund (USL) follow crude oil futures. USO and USL rose 2.6% and 2.7%, respectively, on February 14, 2018.

US gasoline production and demand 

US gasoline production decreased 4.8% to 9,592,000 bpd (barrels per day) on February 2–9, 2018, according to the EIA. However, production increased by 642,000 bpd or 7.2% from a year ago.

US gasoline demand decreased by 51,000 bpd to 9,059,000 bpd on February 2–9, 2018. However, demand increased by 626,000 bpd or 7.4% from a year ago. The year-over-year increase in gasoline demand is bullish for gasoline prices.

Higher gasoline prices relative to crude oil prices support the VanEck Vectors Oil Refiners ETF (CRAK). CRAK has exposure to refining companies. CRAK rose 0.3% to 29.1 on February 14, 2018.

Impact  

US gasoline inventories were ~1.5% above their five-year average for the week ending February 9, 2018, which is bearish for gasoline and oil prices. If inventories drop below the five-year average, it’s a bullish sign for gasoline and oil prices.

Next, we’ll discuss US distillate inventories.

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