Decline in US Crude Oil Inventories Supports Oil Prices

EIA’s US crude oil inventories  

On May 16, the EIA released its weekly crude oil inventory report. The EIA reported that US crude oil inventories declined by ~1.4 MMbbls to 432.3 MMbbls on May 4–11. The inventories also declined by 88.4 MMbbls or ~17% from a year ago.

An S&P Global Platts survey estimated that US crude oil inventories could have decreased by 2.3 MMbbls on May 4–11.

Decline in US Crude Oil Inventories Supports Oil Prices

The drop in US crude oil inventories supported US crude oil futures on May 16. June WTI oil futures rose ~0.3% to $71.49 per barrel on the same day. The ProShares Ultra Bloomberg Crude Oil ETF (UCO) increased ~1% to $33.43 on May 16. UCO targets to provide twice the daily return of an index of WTI oil futures contracts.

The Energy Select Sector SPDR ETF (XLE) rose ~0.4% to $77.55 on May 16. XLE aims to track the performance of the Energy Select Sector Index. Range Resources (RRC), TechnipFMC (FTI), and EQT (EQT) account for ~2.1% of XLE’s holdings. The stocks rose ~4.5%, 3.8%, and ~2.5%, respectively, on May 16. These stocks were the top percentage gainers in XLE’s holdings on May 16.

Refinery demand and imports  

According to the EIA, the US crude oil refinery demand increased ~0.9% to 16,635,000 bpd (barrels per day) on May 4–11. However, the refinery demand decreased by 487,000 bpd or ~2.8% from a year ago.

US crude oil imports increased 3.8% to 7,601,000 bpd on May 4–11. However, the imports decreased by 989,000 bpd or ~11.5% from a year ago.


US oil inventories dropped ~12% in 2017, while WTI oil prices rose 12.4% during the same period. The inventories dropped ~19.3% from the record high on March 31, 2017. Since then, WTI oil futures have increased ~41.2%.

US oil inventories were ~2.4% below their five-year average, which is bullish for crude oil prices. If US oil inventories rise toward the five-year average, it could have a negative impact on oil prices.

Next, we’ll discuss US crude oil production.