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Large Drop in US Gasoline Inventories Helped Oil Futures

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Weekly US gasoline inventories  

The EIA (U.S. Energy Information Administration) released its gasoline inventory data on July 25. The EIA reported that US gasoline inventories decreased by 2.3 MMbbls (million barrels) to 233.5 MMbbls on July 13–20. However, the inventories increased by 3.3 MMbbls or 1.4% from a year ago.

A Reuters survey estimated that US gasoline inventories could have fallen by 0.71 MMbbls on July 13–20. US gasoline futures rose 1.3% to $2.12 per gallon on July 25 due to the larger-than-expected decline in gasoline inventories. The larger-than-expected decline in gasoline inventories also supported WTI crude oil futures on July 25. WTI crude oil futures rose 1.1% on the same day.

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The iShares US Energy ETF (IYE) rose ~0.9% to $41.99 on July 25. The index is composed of US companies in the energy sector. SemGroup (SEMG), PDC Energy (PDCE), Cabot Oil & Gas (COG), and Cheniere Energy (LNG) rose 3.5%, 3.3%, 2.9%, and 2.8%, respectively, on July 25. These stocks account for ~2% of IYE’s holdings.

US gasoline production and imports  

US gasoline production decreased 0.4% to 10.3 MMbpd (million barrels per day) on July 13–20. The production decreased 1.3% from a year ago.

US gasoline imports increased ~29% to 844,000 bpd on July 13–20. However, the imports decreased 17% from a year ago.

Impact  

US gasoline inventories were ~4% above the five-year average for the week ending July 20, which could be bearish for gasoline and crude oil prices. If gasoline inventories fall below the five-year average, it could be bullish for gasoline and oil prices. If the excess inventories increase, it would be bearish for gasoline and crude oil prices.

Next, we’ll discuss US gasoline demand.

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