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Cushing Inventories Drop for the First Time in 5 Weeks

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Cushing inventories 

According to the EIA (U.S. Energy Information Administration), Cushing inventories fell for the first time in five weeks, by 1.1 MMbbls (million barrels) to 36.1 MMbbls between May 11 and 18, and by ~29.4 MMbbls (45%) year-over-year. Inventories and WTI crude oil prices are usually inversely related. WTI crude oil futures have risen ~38% since May 18, 2017, and the iShares Global Energy ETF (IXC) and the Energy Select Sector SPDR ETF (XLE) have risen ~17% and ~14.7%, respectively.

Valero (VLO), Andeavor (ANDV), and Marathon Petroleum (MPC), which account for 7.5% of XLE, have risen ~93.4%, 76%, and 54%, respectively, since May 18, 2017. These stocks were the top gainers in XLE’s portfolio.

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US crude oil inventories

Whereas US crude oil inventories rose ~5.8 MMbbls to 438.1 MMbbls between May 11 and 18, they fell 78.2 MMbbls (~15%) year-over-year. The inventories were ~18% lower than the record high seen on March 31, 2017.

Cushing inventories were ~48% lower than the high reached on April 7, 2017, but close to the highest level seen since February 2. If Cushing inventories rise higher this week, crude oil prices could be pressured. Next, we’ll cover the US crude oil rig count.

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