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Crude Oil Inventory Data Could Swing Prices in Either Direction

Gordon Kristopher

Crude Oil Prices Surge as Iran Joins the Production Alliance

(Continued from Prior Part)

API crude oil inventory report

On February 17, 2016, the API (American Petroleum Institute) released its weekly crude oil inventory report. The data highlighted that US crude oil inventory fell by 3.3 MMbbls (million barrels) for the week ended February 12, 2016.

In contrast, crude inventory rose by 2.4 MMbbls for the week ended February 5, 2016. The API crude oil inventory fell for the first time in the last five weeks.

EIA crude oil inventory and estimates 

The API data is the precursor to the EIA’s (U.S. Energy Information Administration) Weekly Petroleum Status Report. The EIA is releasing its weekly crude oil inventory report on February 18, 2016. The US crude oil inventory fell by 0.8 MMbbls to 502 MMbbls for the week ended February 5, 2016.

Wall Street Journal surveys and Reuters surveys suggest crude oil stocks could rise between 3.1 MMbbls and 3.9 MMbbls for the week ended February 12, 2016. The consensus of rising crude oil inventory will negatively impact crude oil prices.

Crude oil prices rallied 17% in the last three sessions. The recent uptick in oil prices benefits oil and gas producers such as Occidental Petroleum (OXY), Statoil (STO), and CONSOL Energy (CNX). Read the next part of the series to know more about Cushing, gasoline, and distillate inventory.

Impact 

Current crude oil stocks are 17% higher than last year’s levels. They are also at an 80-period high during this time of year. Rising crude oil stocks increase crude oil storage costs.  They also negatively affect crude oil prices.  To learn more, read Crude Oil Storage Costs Rose 9 Times, US Crude Tests New Limits.

Record crude oil stocks and a wider contango market benefit oil tankers such as Teekay Tankers (TNK), Frontline (FRO), and Tsakos Energy Navigation (TNP). They also benefit oil and gas storage and transportation companies such as Williams Companies (WMB), Spectra Energy (SE), and Kinder Morgan (KMI).

The roller coaster ride in the oil and gas market affects ETFs and ETNs such as the Vanguard Energy ETF (VDE), the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bull 3X ETF (ERX), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

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