Will US Crude Oil Inventories Benefit Crude Oil Prices?
Bulls versus Bears: Crude Oil Prices Hit a 7-Month High
API crude oil inventories
On May 17, the API (American Petroleum Institute) released its weekly petroleum status report. The report showed that US crude oil inventories fell by 1.1 MMbbls (million barrels) for the week ending May 13—compared to the previous week. The API reported that Cushing crude oil inventories rose by 0.52 MMbbls for the same period. Read Cushing Crude Oil inventories Hit Record Levels: What’s Next? to learn more about Cushing crude oil stocks.
EIA’s crude oil inventories
Traders closely watch the API data. Tuesday’s API data are followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report on Wednesday. The EIA is scheduled to release its weekly petroleum status report on May 18, 2016. It reported that US crude oil inventories fell by 3.4 MMbbls to 540 MMbbls for the week ending May 6, 2016—compared to the previous week. US crude oil inventories fell for the first time since March 2016. Nationwide crude oil inventories hit an all-time high of 543.6 MMbbls in the week ending April 29, 2016.
Crude oil inventory estimates and impact
A Reuters’ poll suggests that US crude oil inventories fell by 2.8 MMbbls for the week ending May 13—compared to the previous week. The estimates of falling US crude oil inventory could support crude oil prices. However, the near-record US crude oil inventory could limit the upside for crude oil prices. US crude oil inventories are more than 100 MMbbls above their five-year average.
The volatility in crude oil prices impacts upstream producers like Ultra Petroleum (UPL), Whiting Petroleum (WLL), Swift Energy (SFY), and Sanchez Energy (SN). 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.
ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the First Trust Energy AlphaDEX Fund (FXN), and the United States Brent Oil ETF (BNO) are impacted by volatile crude oil prices.
In the next part of this series, we’ll look at gasoline and distillate inventories.
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