Crude Oil Prices Struggle to Hit $50 per Barrel
EIA’s crude oil inventory report
The EIA (U.S. Energy Information Administration) published the weekly crude oil, gasoline, and distillates stocks report on October 7, 2015. Crude stocks rose by 3.1 MMbbls (million barrels) to 461 MMbbls for the week ending October 2, 2015. Similarly, crude oil stocks rose by 4 MMbbls to 457.9 MMbbls for the week ending September 25, 2015. The US crude oil stocks rose for the second straight week. Market surveys projected that crude oil stocks could rise by 1.8 MMbbls for the week ending October 2, 2015. The better-than-expected crude oil rise put downward pressure on crude oil stocks in yesterday’s trade.
Refined products inventory and impact
The EIA added that gasoline stocks rose by 1.91 MMbbls for the week ending October 2, 2015—compared to the rise by 3.3 MMbbls for the week ending September 25, 2015. In contrast, distillates stocks fell by 2.45 MMbbls and 0.27 MMbbls, respectively, for the week ending October 2 and September 25.
Crude oil stocks rose due to the fall in the refinery demand. The EIA’s report highlighted that the crude oil refinery demand fell to the lowest level in the last seven months. The crude oil inputs to refineries fell by 403,000 bpd (barrels per day) to 15.6 MMbpd (million barrels per day) for the week ending October 2, 2015. Refineries operated at 87.5% of their operable capacity for the same period. The refineries’ demand fell due to seasonal maintenance.
Likewise, crude oil imports also fell for the week ending October 2, 2015. US crude oil imports fell by 486,000 bpd to 7.1 MMbpd for the same period. The monthly crude oil imports averaged 7.2 MMbpd. The current crude oil imports are less than the crude oil imports during the same period last year.
Crude oil prices’ long-term downward trend impacts energy producers like Occidental Petroleum (OXY), Hess (HES), Marathon Oil (MRO), and Murphy Oil (MUR). They account for 6.6% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is more than 49% of their total production.
Oil and gas ETFs like the DB Energy Fund (DBE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) are also impacted by the volatility in crude oil prices.
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