Today, the American Petroleum Institute (or API) plans to release its oil inventory data for the week ended August 30. Based on the Reuters poll, the API report could report a decline of 2 MMbbls (million barrels) in oil inventories.
Moreover, gasoline inventories are expected to decline by 1.8 MMbbls. For the week ended August 23, the API reported a decline of around 11.1 MMbbls and 0.35 MMbbls in oil and gasoline inventories, respectively.
What to expect in the EIA inventory data
On September 5, the EIA (US Energy Information Administration) plans to report its inventory data for the week ended August 30. For the week ended August 23, the inventories spread contracted by two percentage points. For the same week, US crude oil inventories were on par with their five-year average.
The inventories spread denotes the difference between US crude oil inventories and their five-year average. Oil prices and the inventories spread often move in opposite directions.
The Reuters poll suggests that the upcoming EIA report could reflect a decline of 3.1 MMbbls in US crude oil inventories. If the EIA report aligns with expectations, then the inventories spread could enter a negative zone—a bullish factor for oil.
Inventory data and energy sector
Since the EIA reported its inventory data on August 28, US crude oil prices have fallen 3.3%. Trade war–related concerns dragged oil prices despite a bullish inventory report.
The United States Oil Fund LP (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) declined 3.6% and 6.9%, respectively, during this period. USO and UCO have long positions on US crude oil futures. The DB Crude Oil Double Short ETN (DTO) gained 6.5% between August 28 and September 3. DTO has short positions on oil futures.
Energy stocks Chesapeake Energy (CHK), Range Resources (RRC), and Southwestern Energy (SWN) returned -6.1%, 4.8%, and -2.4%, respectively. CHK, RRC, and SWN operate with respective production mixes of 31%, 31%, and 20.4% in oil prices-linked commodities. Despite having a majority of their production mixes in natural gas, oil is an essential driver for these natural gas–weighted stocks.
Crude oil technicals
Today at 9:53 AM EDT, US crude oil futures were 1.4% above the 20-day moving average. A peaceful resolution to the Hong Kong extradition crisis helped boost oil prices. However, US crude oil prices are 1.5%, 4.1%, and 0.9% below their 50-, 100-, and 200- day moving averages, respectively.
But, the 50-day moving average is just 0.6% above the 200-day moving average. The 50-day moving average moved above the 200-day moving average on August 23.
If US crude oil prices move up after the release of the inventory data, the 50-day moving average could decisively move above the 200-day moving average. This crossover is considered bullish for asset prices.