API’s crude oil inventories
On July 3, the API (American Petroleum Institute) released its oil inventory report after the crude oil futures settlement for that day on NYMEX. The API reported that US crude oil inventories fell by 4.5 MMbbls (million barrels) to 416.9 MMbbls on June 22–29.
A Bloomberg survey estimates that US oil inventories could have declined by 5 MMbbls during the same period. Genscape estimates that Cushing crude oil inventories could have declined by 2 MMbbls on June 22–29. The EIA (U.S. Energy Information Administration) is scheduled to release its oil inventory report on July 5.
Drivers of crude oil futures
August WTI crude oil prices hit an intraday high of $75.27 per barrel on July 3—the highest level since November 2014. A drop in the US Dollar Index, supply outages in Libya and Canada, sanctions on Iran, and the expectation of a decline in crude oil, gasoline, and distillate inventories supported crude oil prices.
However, the rise in crude oil production from OPEC, Russia, and the US could pressure oil prices. Saudi Arabia is expected to pump up to 11 MMbpd (million barrels per day) of crude oil in July, which is up from 10.7 MMbpd in June—the highest level in its history if the projections are achieved.
Active WTI crude oil futures rose ~0.3% on July 3. The Energy Select Sector SPDR ETF (XLE) rose ~0.63% the same day. The companies in XLE produce crude oil and natural gas and provide other energy-related services.
Marathon Oil (MRO), Apache (APA), Noble Energy (NBL), and Helmerich & Payne (HP) rose 3%, 2.5%, 2%, and 1.95%, respectively, on July 3. These stocks were the top percentage gainers in XLE’s holdings on the same day. These stocks account for 4.2% of XLE’s holdings.
EIA’s inventory data
A larger-than-expected decline in US oil inventories reported by the EIA on July 5 could support oil prices. However, an unexpected build in the inventories could pressure oil prices.
Next, we’ll discuss the API’s estimates for US gasoline and distillate inventories.