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Are US Crude Oil Inventories below Their 5-Year Average?

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EIA’s US crude oil inventories 

The EIA released its crude oil inventory report on April 4, 2018. The EIA reported that US crude oil inventories decreased by 4.6 MMbbls (million barrels) to 425.3 MMbbls on March 23–30, 2018. The inventories also dropped by 110.2 MMbbls or 20.6% year-over-year.

A Reuters survey estimated that US oil inventories could have risen by 0.2 MMbbls on March 23–30, 2018. The unexpected drop in US oil inventories limited oil prices’ downside on April 4, 2018. US crude oil futures fell 0.2% to $63.37 per barrel on April 4, 2018.

The Energy Select Sector SPDR ETF (XLE) fell 0.1% to $67.38 on April 4, 2018, while the Vanguard Energy ETF (VDE) fell 0.1% to $92.25 on the same day. XLE follows the Energy Select Sector Index. VDE tracks an index of energy stocks.

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Refinery demand and imports 

According to the EIA, US crude oil refinery demand increased 0.8% to 16,936,000 bpd (barrels per day) on March 23–30, 2018. The refinery demand also increased by 507,000 bpd or ~3.1% from a year ago.

US crude oil imports decreased by 250,000 bpd or ~3.1% to 7,898,000 bpd on March 23–30, 2018. However, imports increased by 48,000 bpd or ~1% from a year ago.

Impact 

US oil inventories dropped ~12% in 2017, while WTI oil prices increased 12.4% during the same period. Inventories declined ~20.6% from the record high reached on March 31, 2017. WTI oil prices have increased ~25.2% since March 31, 2017.

The ProShares Ultra Bloomberg Crude Oil ETF (UCO) has increased ~38.3% since March 31, 2017. UCO targets to provide twice the daily return of an index of WTI oil futures contracts.

US oil inventories were ~2.4% below their five-year average, which is bullish for oil prices. If US oil inventories rise towards the five-year average, it’s bearish for oil prices.

Next, we’ll discuss US crude oil production.

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