EIA’s US crude oil inventories
On June 27, the EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report. The EIA reported that US crude oil inventories decreased by 9.9 MMbbls (million barrels) to 416.7 MMbbls on June 15–22—the largest weekly decline in US crude oil inventories since the week ending September 2, 2016. The inventories also decreased by 92.6 MMbbls or 18.2% from a year ago. A Reuters survey estimated that US crude oil inventories could have declined by 2.6 MMbbls on June 15–22.
August WTI crude oil futures rose 3.2% to $72.76 per barrel on June 27—the highest settlement since November 2014. The prices rose due to the massive drop in US crude oil inventories.
The Energy Select Sector SPDR ETF (XLE) rose ~1.3% to $75.57 on June 27. The companies in XLE develop and produce crude oil and natural gas and other energy-related services.
Concho Resources (CXO), Apache (APA), EOG Resources (EOG), and Pioneer Natural Resources (PXD) rose 4.6%, 3.9%, 3.6%, and 3.5%, respectively, on June 27. These stocks were the top percentage gainers in XLE’s holdings on the same day. These stocks account for ~9.9% of XLE’s holdings.
Refinery demand and imports
US crude oil refinery demand increased by 115,000 bpd (barrels per day) to a record high of 17,816,000 bpd on June 15–22, according to the EIA. The demand also increased by 926,000 bpd or 5.5% from a year ago. A rise in the demand is bullish for crude oil prices.
US crude oil imports increased by 114,000 bpd to 8,356,000 bpd on June 15–22. US crude oil imports increased by 340,000 bpd or 4.2% from a year ago. US crude oil exports hit a record, which we’ll discuss in Part 4
As of June 22, US oil inventories fell 22.2% from the record high hit during the week ending March 31, 2017. Since then, WTI crude oil prices have gained ~44%.
US crude oil inventories were also 3.4% below the five-year average, which is bullish for oil prices. If US crude oil inventories rise above the five-year average, it could weigh on oil prices.
Next, we’ll discuss US crude oil production.