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Gasoline Inventories Could Push Oil Prices to Multiyear Highs

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Nov. 20 2020, Updated 4:01 p.m. ET

API’s gasoline inventories 

The API (American Petroleum Institute) released its weekly US gasoline inventory data on July 3 after the gasoline futures settlement for that day on NYMEX. The API reported that US gasoline inventories fell by ~3.1 MMbbls (million barrels) on June 22–29.

A Reuters survey estimates that US gasoline inventories could have fallen by ~0.8 MMbbls during the same period. US gasoline gas futures contracts rose 0.41% from the previous settlement in early morning trading on July 4.

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Before the API released the data, US gasoline futures rose 0.6% and closed at $2.16 per gallon on July 3. A larger-than-expected decrease in gasoline inventories reported by the EIA (U.S. Energy Information Administration) on July 5 could support gasoline prices. Higher gasoline prices could also help crude oil prices. However, an unexpected build in gasoline inventories could pressure gasoline and oil prices.

Crude oil and gasoline futures usually move in tandem. US crude oil prices rose 0.3% on July 3—the highest level since November 2014. The VanEck Vectors Oil Refiners ETF (CRAK) rose 1.2% on July 3. CRAK has exposure to refining companies.

HollyFrontier (HFC), Marathon Petroleum (MPC), PBF Energy (PBF), and Delek US Holdings (DK) rose ~1%, ~0.8%, 0.3%, and 0.26%, respectively, on July 3. These stocks account for ~15% of CRAK’s holdings.

API’s distillate inventories  

The API estimates that US distillate inventories decreased by ~0.4 MMbbls on June 22–29. A Reuters survey estimates that US distillate inventories could have decreased by ~0.6 MMbbls during the same period.

A larger-than-expected drop in distillate inventories reported by the EIA could support diesel and oil prices. However, an unexpected rise in distillate inventories could pressure diesel and oil prices.

Next, we’ll discuss the US Dollar Index.

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