API’s crude oil inventories
On June 5, the API (American Petroleum Institute) released its crude oil inventory report. It reported that US crude oil inventories had fallen 2 MMbbls (million barrels) from May 25 to June 1. A Wall Street Journal survey estimates that US oil inventories may have fallen 1.9 MMbbls during the same period.
The API added that crude oil inventories at Cushing had fallen ~1 MMbbl from May 25 to June 1.
Drivers of crude oil futures
Crude oil prices rose on June 5 due to the expectation of a fall in US crude oil inventories to be reported by the EIA (U.S. Energy Information Administration) on June 6 and a weak US Dollar Index. However, record US crude oil production and expectations of rises in crude oil production from Saudi Arabia and Russia could pressure oil prices. According to Bloomberg, the United States has asked some OPEC producers to increase crude oil production by ~1,000,000 bpd (barrels per day).
WTI crude oil prices rose ~1.2% on June 5. However, the Energy Select Sector SPDR ETF (XLE) fell ~0.24% on the same day. XLE aims to track the performance of the Energy Select Sector Index.
Marathon Oil (MRO), Marathon Petroleum (MPC), Devon Energy (DVN), and Andeavor (ANDV) account for ~7% of XLE’s holdings. These stocks fell ~2.4%, 2.0%, ~1.9%, and ~1.9%, respectively, on June 5. Among XLE’s holdings, they saw the highest losses on the day.
EIA’s inventory data
A larger-than-expected decline in US oil inventories reported by the EIA could benefit oil prices. However, an unexpected build in inventories could pressure oil prices.
Next, we’ll cover gasoline and distillate inventories as estimated by the API.