US Crude Oil Inventory and Production Boost Crude Oil Prices
EIA’s crude oil inventories
The EIA (U.S. Energy Information Administration) released its weekly petroleum status report on April 6, 2016. It reported that the US crude oil inventory fell by 4.9 MMbbls (million barrels) to 529.9 MMbbls for the week ending April 1, 2016. Market surveys from Platt’s to Reuters estimated that the US crude oil inventory could have risen between 2.9 MMbbls and 3.2 MMbbls for the same period. The unexpected decline in the US crude oil inventory supported crude oil prices on April 1, 2016. To find out more about crude oil prices, read the previous part of the series. The US crude oil inventory fell due to the rise in the refinery demand and drop in US crude oil imports. Check the next part of the series to learn more.
US crude oil inventory by region
The EIA divides the US into five storage regions—East Coast, Midwest, Gulf Coast, Rocky Mountain, and West Coast. In the Gulf Coast region, crude oil inventories fell to 277.5 MMbbls from 281.9 MMbbls for the week ending April 1, 2016—compared to the previous week. In contrast, the Midwest crude oil inventories rose to 155.6 MMbbls from 154.8 MMbbls for the same period. Crude oil stocks fell marginally by 0.8 MMbbls to 55.2 MMbbls in the West Coast region for the same period. The East Coast crude oil stocks fell to 17.8 MMbbls from 18.5 MMbbls for the same period. The Rocky Mountain region’s crude oil stocks were flat at 23.7 MMbbls for the same period.
The rise and fall in US crude oil stocks impact storage costs. To learn more, 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.
Impact of near record US crude oil inventory
The total US crude oil inventory hit an all-time high of 534.8 MMbbls for the week ending March 25, 2016. US crude oil inventories are also 9.8% more than the same period in 2015. They’re also 100 MMbbls more than the five-year average crude oil inventory. Record US crude oil inventories could put pressure on crude oil prices. Low crude oil prices impact oil producers’ margins like QEP Resources (QEP), WPX Energy (WPX), Linn Energy (LINN), and Carrizo Oil & Gas (CRZO).
The contango market and the near record US crude oil inventory support crude oil tanker companies like Nordic American Tankers (NAT) and DHT Holdings (DHT).
The ups and downs in crude oil prices impact ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Guggenheim S&P 500 Equal Weight Energy (RYE), the PowerShares DWA Energy Momentum (PXI), the DB Crude Oil Double Short ETN (DTO), and the Direxion Daily Energy Bear 3x ETF (ERY).