US Dollar and Inventory Data Impact the Crude Oil Market
EIA’s crude oil inventory report
On September 10, 2015, the EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report. It reported that the US commercial crude oil inventory rose by 2.6 MMbbls (million barrels) to 458 MMbbls for the week ending September 4, 2015. Market surveys projected that the crude oil stockpile could rise by 0.9 MMbbls for the same period. Crude oil prices didn’t react to the larger-than-expected rise in crude oil stocks. Prices factored in the consensus of rising crude oil stocks.
Refined products stock
Gasoline inventories rose slightly by 0.4 MMbbls for the week ending September 4, 2015—compared to the market estimates of 0.8 MMbbls for the same period. The less-than-expected rise in gasoline stocks supported crude oil prices. The gasoline consumption also rose during the last four weeks due to lower gasoline prices and the peak summer driving season. The gasoline consumption was more than 4% higher than the 2014 levels during the same period. The rise in the demand for crude oil refined products supported crude oil prices. Meanwhile, distillates rose by 1 MMbbls for the week ending September 4, 2015. This was in line with market estimates.
US crude oil inventories rose due to the fall in refinery utilization. Crude oil inputs to US refineries fell by 279,000 bpd (barrels per day) to 16.1 MMbpd (million barrels per day) for the week ending September 4, 2015. The US refineries operated at 90.90% of their operable capacity over the same period. The refinery utilization might have fallen due to the beginning of refineries’ seasonal maintenance.
US crude oil imports fell by 396,000 bpd to 7.5 MMbpd for the week ending September 4, 2015. Monthly crude oil imports averaged around 7.6 MMbpd. It’s 0.50% more than the same period in 2014.
Record inventory and its impact
Currently, the crude oil inventory is 27% more than the levels in 2014. It’s also near the 80 period-high levels for stocks during this time of the year. Record US crude oil stocks and the speculation of rising crude oil inventory will continue to put pressure on crude oil prices.
The roller coaster ride of crude prices impacts US upstream producers like Occidental Petroleum (OXY), ConocoPhillips (COP), and Hess (HES). Combined, they account for 8.25% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is greater than 49% of their production portfolio.
Oil and gas ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) are also influenced by the volatility in crude oil prices.