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EIA Inventory Data: Impact on Oil

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Changes in inventory levels

On April 24, the EIA (U.S. Energy Information Administration) is scheduled to announce last week’s US crude oil inventory data. A rise of less than 0.14 MMbbls (million barrels) would keep the inventories spread in the negative territory. A fall of more than 9 MMbbls would help the inventories spread to contract more into the negative territory. A Reuters poll expects a fall of 0.17 MMbbls in oil inventories. If the EIA data are in line with the poll, the inventories spread will contract by one percentage point.

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Oil inventories and their five-year average

In the week ending April 12, US crude oil inventories were 2% below their five-year average—compared to on par with their five-year average the previous week. Oil prices and the inventories spread usually move inversely. If the inventories spread remains in the negative territory or expands more, it could boost oil prices in the coming weeks. The inventories spread is the difference between oil inventories and their five-year average.

Oil prices and energy stocks

Since the EIA released its inventory data on April 17, US crude oil June futures have risen 2.6%. On April 17–22, oil-weighted stocks Oasis Petroleum (OAS), Denbury Resources (DNR), and Carrizo Oil & Gas (CRZO) rose 7.2%, 11.8%, and 13.1%, respectively, and outperformed their peers. The inventories spread coming back into the red zone and the end of US waivers might have boosted oil prices.

Since April 17, the S&P 500 (SPY) and the Dow Jones Industrial Average (DIA) have risen 0.3% and 0.2%, respectively. These indexes’ energy components are sensitive to oil prices.

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