API’s crude oil inventories
On May 1, the API (American Petroleum Institute) released its crude oil inventory report. The API reported that US crude oil inventories increased by 3.4 MMbbls (million barrels) on April 20–27. Analysts estimate that US oil inventories could have increased by 0.7 MMbbls during the same period. The API added that the crude oil inventory at Cushing dropped by ~0.7 MMbbls on April 20–27.
However, June WTI oil futures contracts rose 0.5% from the previous settlement and were trading at $67.59 per barrel at 2:10 AM EST on May 2.
WTI crude oil prices fell ~1.9% on May 1. The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) decreased ~1.4% and ~2.9%, respectively, on May 1. USO seeks to follow active WTI oil futures’ performance. UCO seeks 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 1 due to the expectation of a rise in US crude oil production and inventories. However, oil prices are near 40-month highs. Geopolitical tension, strong oil demand, and the expectation of another extension of ongoing production cuts have been supporting oil prices.
The Energy Select Sector SPDR Fund (XLE) decreased ~0.6% on May 1. US oil futures fell 1.9% on the same day. XLE aims to track the performance of the Energy Select Sector Index.
Andeavor (ANDV), Marathon Petroleum (MPC), and Noble Energy (NBL) account for ~5.1% of XLE’s holdings. These stocks fell ~3.5%, 2.7%, and ~2.3%, respectively, on May 1. Andeavor, Marathon Petroleum, and Noble Energy were the top percentage losses in XLE’s portfolio on May 1.
Next, we’ll discuss gasoline and distillate inventories.