Key Energy MLP Indicators: Weekly Update
US crude oil inventories
According to data released on October 28, US crude oil inventories rose 0.7% in the week ending October 23 compared to the previous week. At the same time, the refinery utilization rate in the United States rose to 87.6% from 86.4% in the previous week. The refinery utilization rate is calculated as gross inputs to refineries divided by refineries’ operable refining capacities. US crude oil inventories, which have shot up since mid-2014, peaked in April 2015.
US crude oil production
US crude oil production in the week ending October 23 rose 0.2% compared to the previous week. The above graph shows the weekly demand and supply for crude oil in the United States over the last six weeks. US crude oil production increased significantly starting in 2012, but there has been a slight decline in crude oil production over the last three months.
US crude oil imports
US crude oil imports fell 5.9% compared to the previous week. Imports had risen 2.1% in the week ending October 16. With increased domestic production, imports have come down over time to keep US crude oil supply relatively stable.
US refinery inputs
US crude oil refinery inputs for the latest week were 15.6 MMbpd (million barrels per day). Inputs to US refineries were less than total crude oil production and imports. This may contribute to a rise in crude oil inventories. Crude oil supply and demand dynamics drive crude oil prices.
Impact on MLPs
The demand for crude oil and refined products drives volumes and revenue for pipeline MLPs such as Genesis Energy (GEL), NuStar Energy (NS), and Holly Energy Partners (HEP). Crude oil inventory levels in the United States are currently near 80-year highs. High inventory levels have increased the demand for crude oil storage assets.
MLPs with crude oil storage capacity should benefit from this increased demand for storage. MLPs with storage assets include Plains All American Pipeline (PAA) and Blueknight Energy Partners (BKEP). PAA forms 0.8% of the Guggenheim Multi-Asset Income ETF (CVY).
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