Cushing Inventory Suggests Further Bloodbath in Crude Oil Market
China's Market Collapse and Middle East Tension Affect Oil Market
Cushing and API crude oil inventory
The latest data from Genscape suggest that the crude oil inventory at Cushing, Oklahoma, is continuing to rise. For the week ending January 1, 2016, the inventory rose by 0.480 MMbbls (million barrels). The increase may have been due to the floods in the Midwest, which resulted in the closing of pipelines. Meanwhile, the API (American Petroleum Institute) is set to release its weekly crude oil inventory report for the week ending January 1, 2016. Last week, the API stated that the crude oil inventory had risen by 2.9 MMbbls (million barrels) and the gasoline and distillate inventories had risen by 0.53 MMbbls and 2.1 MMbbls, respectively, for the week ending December 25, 2015.
EIA crude oil inventory report
Crude oil traders closely watch the API inventory, as it provides cues for the EIA (U.S. Energy Information Administration) data. The EIA will release its weekly petroleum status report tomorrow. Last week, the report showed the US crude oil inventory had risen by 2.6 MMbbls to 487.4 MMbbls for the week ending December 25, 2015. The US crude oil inventory rose due to the increase in US crude oil imports. Market surveys from Reuters suggest that the US crude oil inventory may have fallen by 0.5 MMbbls for the week ending January 1, 2016.
The consensus of falling US crude oil inventory could push crude oil prices higher. However, rising Cushing inventory would put pressure on crude oil prices. The wider contango and inventories are benefiting oil tankers like Frontline (FRO), DHT Holdings (DHT), Teekay Tankers (TNK), and Euronav (EURN).
The wider contango market and high inventories are benefiting oil tankers like Frontline (FRO), DHT Holdings (DHT), Teekay Tankers (TNK), and Euronav (EURN). For more on this, read How the Fed Influences Contango Crude Oil Market Traders.
The rises and falls in the energy market also affect ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX Fund (FXN).
In the next part of this series, we’ll explore how tension in the Middle East could affect crude oil prices.
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