API’s crude oil inventories
On May 8, the API (American Petroleum Institute) released its crude oil inventory report. The API reported that US crude oil inventories decreased by 1.85 MMbbls (million barrels) on April 27–May 4. Market surveys estimate that US oil inventories could have decreased by 0.7 MMbbls during the same period. The API added that the crude oil inventory at Cushing increased by ~1.6 MMbbls on April 27–May 4.
WTI crude oil prices fell ~2.4% on May 8. The ProShares Ultra Bloomberg Crude Oil ETF (UCO) decreased ~0.4% to $31.65 on May 8. UCO targets to provide twice the daily return of an index of WTI oil futures contracts.
Drivers for crude oil futures
Crude oil prices fell on May 8 due to profit-booking and the strong US Dollar Index. The expectation of a rise in US crude oil production might pressure oil prices.
However, President Trump’s announcement about imposing new sanctions on Iran limited the downside for oil prices on May 8. Oil prices are near 41-month highs. Geopolitical tension, strong demand, and the expectation of another extension of ongoing supply cuts have been supporting oil prices.
The Energy Select Sector SPDR Fund (XLE) increased ~0.8% on May 8. US oil futures fell 2.4% on the same day. XLE aims to track the performance of the Energy Select Sector Index.
Marathon Petroleum (MPC), Andeavor (ANDV), and Kinder Morgan (KMI) account for ~6.2% of XLE’s holdings. These stocks fell ~1.6%, 1.5%, and ~0.9%, respectively, on May 8. Marathon Petroleum, Andeavor, and Kinder Morgan were the top percentage losses in XLE’s portfolio on May 8.
Next, we’ll discuss gasoline and distillate inventories.