Larger Rise in Gasoline Inventories Impacted Crude Oil Prices
Crude Oil Market Update: More Data Support Bearish Traders
API and EIA gasoline inventory
The EIA (U.S. Energy Information Administration) reported that US gasoline inventories rose by 1.3 MMbbls (million barrels) to 255.7 MMbbls for the week ending February 5, 2016. Last week, US gasoline inventories rose by 5.9 MMbbls for the week ending January 29, 2016. The API (American Petroleum Institute) reported that the US gasoline inventory rose by 3.1 MMbbls for the week ending February 5, 2016. Read the fifth part of the series to learn more about distillate stocks.
Gasoline inventory by regions
The gasoline inventory rose the most in the Gulf Coast region. It rose to 83.7 MMbbls for the week ending February 5, 2016. The inventory also rose in the East Coast and Midwest regions, respectively, for the same period. The gasoline inventory rose by 68.8 MMbbls and 62.9 MMbbls, respectively, in these regions for the same period. The Gulf Coast, Midwest, and East Coast regions contribute to the major gasoline inventories in the US. In the next part of this series, we’ll discuss US crude oil storage.
Gasoline inventory estimates and gasoline prices
Market surveys projected that gasoline inventories could rise by 0.41 MMbbls for the week ending February 5, 2016. However, the larger-than-expected rise in gasoline inventories weighed on crude oil prices. The prices fell in yesterday’s trade. Gasoline prices rose by 5.6% and closed at $0.94 per gallon. The rise in gasoline prices benefits oil refiners like Alon USA Energy (ALJ), HollyFrontier (HFC), Phillips 66 (PSX), Marathon Petroleum (MPC), Sunoco (SUN), and Western Refining (WNR). Gasoline prices tested December 2008 lows on February 8 due to rising gasoline stocks. On February 10, 2016, gasoline prices rallied due to short covering and bargain buying.
The current gasoline stocks are 8% more than the five-year average. The record gasoline inventory will impact crude oil prices because gasoline is the refined form of crude oil. Read more about gasoline production and demand in the next part of the series. The rising refined products inventory will put pressure on oil producers such as Hess (HES), Energy XXI (EXXI), Halcon Resources (HK), and ConocoPhillips (COP).
ETFs and ETNs such as the United States Oil Fund (USO), the Direxion Daily Energy Bull 3x (ERX), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO) are also influenced by the ups and downs in the oil market.
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