Gasoline Inventories Pressure Gasoline and Oil Prices

Weekly US gasoline inventories  

On May 23, the EIA released its weekly gasoline inventory data. The EIA reported that US gasoline inventories increased by 1.9 MMbbls (million barrels) to 233.9 MMbbls on May 11–18. However, the inventories have fallen by 5.9 MMbbls or 2.5% YoY (year-over-year).

Gasoline Inventories Pressure Gasoline and Oil Prices

A Reuters survey estimated that US gasoline inventories could have dropped by 1.4 MMbbls on May 11–18. The surprise build in gasoline inventories pressured US gasoline and crude oil futures on May 23. US gasoline futures fell 0.4% to $2.26 per gallon on May 23. The United States Gasoline ETF (UGA) aims to follow the performance of US gasoline futures. UGA fell ~0.3% to $35.93 on May 23. Likewise, US oil futures fell ~0.4% to $71.84 per barrel on May 23. We discussed the surprise build in crude oil inventories in Part 2 of this series.

US gasoline and crude oil prices have increased ~60.2% and ~69%, respectively, since June 21, 2017. The VanEck Vectors Oil Refiners ETF (CRAK) increased 52.3% during the same period. CRAK has exposure to refining companies. HollyFrontier (HFC), PBF Energy (PBF), and Delek US Holdings (DK) account for ~8.6% of CRAK’s holdings. The stocks have risen ~194%, 119%, and ~111%, respectively, since June 21, 2017. The stocks have been among the top percentage gainers in CRAK’s holdings since June 21, 2017.

US gasoline production and demand 

US gasoline production decreased 4% to 10,462,000 bpd on May 11–18, according to the EIA. The production also decreased by 191,000 bpd or 2% YoY.

US gasoline demand increased 1.7% to 9,689,000 bpd on May 11–18. However, the demand has decreased by 15,000 bpd or 0.2% YoY.

Impact 

US gasoline inventories were ~2.8% above their five-year average, which is bearish for gasoline and crude oil prices. If US gasoline inventories decline below the five-year average, it could be bullish for gasoline and oil prices.

Read Iran’s Supplies and US Crude Oil Could Influence Oil Futures and Rising Crude Oil Prices Could Impact US Natural Gas Futures for the latest updates on crude oil and natural gas.