Analyzing the EIA's Latest US Crude Oil Inventory Report
Crude oil prices
WTI (West Texas Intermediate) crude oil futures contracts for June delivery rose slightly by 0.3% and closed at $43.78 per barrel on May 4, 2016. Brent crude oil futures fell by 0.8% to $44.62 per barrel.
The larger-than-expected rise in US crude oil inventories limited the upside for crude oil prices despite supply disruptions in Canada. Oil-tracking ETFs such as the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose by 0.4% and 0.47%, respectively, on May 4, 2016.
Supply disruption in Canada
In the Fort McMurray region of Alberta, Canada, a wildfire started on May 2, 2016. The fire hampered crude oil production activity in the major oil-sands mining operations in the area.
The supply disruption boosted crude oil prices in the early trades of May 4, 2016. The uptick in crude oil prices benefited oil producers such as Bill Barrett (BBG), Halcon Resources (HK), and Energy XXI (EXXI).
Wildfire manager for Alberta’s agriculture and forestry ministry stated that the fire was complex and out of control. Oil producers suggested that the wildfire could lead to a fall in crude oil production by 1 MMbpd.
Most Canadian crude oil is exported to the United States. Oil producers such as Suncor Energy (SU) and Royal Dutch Shell (RDS.A) operate in this region. They’ve to cut back on crude oil production.
Other supply disruptions
Iraq, Nigeria, and Libya also had supply outages recently. Supply outages benefit crude oil prices. However, US crude oil inventories tested record levels. To learn more, read the next part of the series.
Brent crude oil prices
Brent crude oil prices hit a 2016 high on April 28, 2016. Prices tumbled on May 4 due to rising crude oil production from OPEC (Organization of the Petroleum Exporting Countries). To learn more, you can read OPEC Crude Oil Production Data Ignites Concerns of Oversupply.
The appreciating dollar also weighed on Brent crude oil prices. The US dollar index rose on May 4, 2016, due to stronger-than-expected growth in US services sector data.
WTI and Brent crude oil price volatility also influences ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the ProShares Ultra Oil & Gas ETF (DIG), and the VelocityShares 3x Inverse Crude Oil ETN (DWTI).
For the latest on the bullish catalysts, read What Bullish Catalysts Are Driving Crude Oil Prices this Week? and Why South Korea and India Are Bullish Forces for Crude Oil. For more on bearish drivers, read Crude Oil Traders Are Closely Watching These Bearish Drivers.
This series also covers US crude oil production and imports, refinery demand, and US gasoline and distillate prices and inventories.
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