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API Reported a Large Build in US Crude Oil Inventories

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Crude oil futures  

WTI oil futures contracts for May delivery fell 0.5% to $65.25 per barrel on March 27, 2018. Brent oil futures contracts fell 0.01% to $70.11 per barrel on the same day.

The United States Oil ETF (USO) and the United States Brent Oil ETF (BNO) track US and Brent oil futures, respectively. USO fell ~1% to 13.08 on March 27, 2018, while BNO fell 0.7% to 19.03 on the same day.

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Drivers for crude oil futures  

Crude oil prices fell on March 27, 2018, due to the expectation of a rise in US crude oil inventories and US oil production. The expectation of a rise in Cushing crude oil inventories also pressured oil prices on March 27, 2018.

The Energy Select Sector SPDR Fund (XLE) and the Vanguard Energy ETF (VDE) decreased ~0.9% and ~1.1%, respectively, on March 27, 2018. US oil futures fell 0.5% on the same day. XLE follows the Energy Select Sector Index. VDE follows an index of energy stocks.

API’s crude oil inventories 

The API (American Petroleum Institute) released its crude oil inventory report on March 27, 2018. The API estimates that US oil inventories increased by 5.3 MMbbls (million barrels) to 430.6 MMbbls on March 16–23, 2018. Analysts estimate that US oil inventories could have increased by 1.4 MMbbls during the same period.

A larger-than-expected increase in US oil inventories reported by the EIA could pressure oil prices. However, an unexpected decline in inventories could support oil prices.

The API added that Cushing inventories increased by 1.6 MMbbls on March 16–23, 2018.

Series overview 

In this series, we’ll discuss US gasoline inventories and the US dollar. We’ll also discuss Iran’s oil production and Saudi Arabia and Russia’s production cut plan.

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