28 Jun

US Gasoline Futures Rose despite Higher Gasoline Inventories

WRITTEN BY Gordon Kristopher

Weekly US gasoline inventories  

On June 27, the EIA (U.S. Energy Information Administration) released its weekly gasoline inventory data. The EIA reported that US gasoline inventories increased by 1.2 MMbbls (million barrels) to 241.2 MMbbls on June 15–22. The inventories also increased by 224,000 barrels or 0.1% from a year ago.

US Gasoline Futures Rose despite Higher Gasoline Inventories

A Reuters survey estimated that US gasoline inventories could have risen by 1.3 MMbbls on June 15–22. US gasoline futures rose 2.8% to $2.13 per gallon on June 27 despite the build in gasoline inventories. Gasoline and crude oil futures usually move in tandem. WTI crude oil futures rose 3.2% on June 27.

The iShares US Energy ETF (IYE) rose ~1.3% on June 27. The index is composed of US companies in the energy sector. Ensco (ESV), Rowan Companies (RDC), Transocean (RIG), and RSP Permian (RSPP) increased 8.5%, 7.4%, 6.5%, and 5.1%, respectively, on June 27. These stocks were the top percentage gainers in IYE’s portfolio during the same period. These stocks account for ~1% of IYE’s holdings.

US gasoline production and demand  

US gasoline production increased 0.4% to 10,142,000 bpd (barrels per day) on June 15–22, according to the EIA. However, the production decreased by 192,000 bpd or 1.9% from a year ago.

US gasoline demand rose ~4.3% to 9,731,000 bpd on June 15–22. The demand increased by 193,000 bpd or 2% from a year ago.

The American Automobile Association estimates that a record 46.9 million Americans are expected to travel for the July 4 holiday, which suggests strong demand for gasoline and crude oil.

Impact  

US gasoline inventories were ~5.9% above their five-year average for the week ending June 27, which could be bearish for gasoline and oil prices. If gasoline inventories decline below the five-year average, it could be bullish for gasoline and crude oil prices. If the excess inventories increase, it would be bearish for gasoline and crude oil prices.

Read OPEC’s Meeting and Spare Crude Oil Production Capacity and OPEC Meeting Could Affect US Natural Gas Prices for crude oil and natural gas updates.

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