Battle of the Bulls and Bears: Who Will Win the Crude Oil Market?
API crude oil inventories
On April 26, 2016, the US industry group API (American Petroleum Institute) released its weekly crude oil inventory report. It showed that US crude oil inventory fell by 1.1 MMbbls (million barrels) for the week ended April 22, 2016, compared to the previous week. The API added that Cushing crude oil inventories rose by 1.9 MMbbls for the same period. To learn more about Cushing crude oil stocks, read Cushing Crude Oil Stocks Could Put Pressure on Crude Oil Prices.
EIA’s crude oil inventories
Tuesday’s API data were followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report on Wednesday, April 27, 2016. The EIA reported that US crude oil inventory rose by 2.1 MMbbls to 538.6 MMbbls for the week ended April 15, 2016, compared to the previous week. It’s the highest level ever for US crude oil inventory.
The wide contango market and record US crude oil inventories support crude oil tanker companies such as Tsakos Energy Navigation (TNP), Frontline (FRO), and DHT Holdings (DHT).
The rise and fall in crude oil stocks impact storage costs. For more on this, read Crude Oil Storage Costs Rose 9 Times, US Crude Tests New Limits and Record US Crude Oil Inventory Led to a New Storage Space.
Crude oil inventory estimates and impact
The latest survey by Reuters suggests that US crude oil inventories rose by 2.4 MMbbls for the week ended April 22, 2016, compared to the previous week. This means US crude oil stocks could have risen for three straight weeks. The estimates of rising US crude oil stocks could put pressure on crude oil prices.
Multiyear low crude oil prices affect crude oil producers such as Comstock Resources (CRK), Northern Oil & Gas (NOG), and Halcon Resources (HK). For more information on US energy companies’ financial woes, read North American Oil and Gas Producers’ Debt Rose in 2015 and Crude Oil’s Total Cost of Production Impacts Major Oil Producers.
The roller coaster ride in crude oil prices affects ETFs and ETNs such as the United States Oil Fund (USO), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Direxion Daily Energy Bear 3X ETF (ERY), and the United States Brent Oil ETF (BNO).
In the next part of this series, we’ll take a look at gasoline and distillate inventories.
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