Yahoo Finance Rising Distillate Inventory Pressures Oil Prices
Crude Oil Market Update: More Data Support Bearish Traders
API and EIA’s distillate inventory
The EIA (U.S. Energy Information Administration) reported that the distillate inventory rose by 1.3 MMbbls (million barrels) to 161 MMbbls for the week ending February 5, 2016. Last week, the distillate inventory fell by 0.8 MMbbls for the week ending January 29. The API (American Petroleum Institute) reported that the distillate inventory rose by 1.7 MMbbls for the week ending February 5, 2016.
US distillate inventory by regions
Distillate stocks rose to 62.3 MMbbls in the East Coast region for the week ending February 5, 2016. In contrast, distillate stocks fell to 47.2 MMbbls in the Gulf Coast region for the same period. In the Midwest region, distillate stocks fell to 33.3 MMbbls for the same period. The East Coast and Gulf Coast regions contribute to most of the distillate inventory that’s stored in the US.
Distillate inventory estimates
Market surveys expected that distillate stocks would fall by 1.6 MMbbls for the week ending February 5, 2016. In contrast, distillate stocks increased. This had a negative impact on crude oil prices. Distillates are refined forms of crude oil. In the next part of this series, we’ll discuss why distillate stocks rose.
The current distillate inventories are 16% more than the five-year average. The rising refined products inventory will put pressure on oil producers such as Hess (HES), Energy XXI (EXXI), and Halcon Resources (HK). Rising supplies increase oil volumes and benefit oil and gas storage and transportation companies such as Williams Companies (WMB), Spectra Energy (SE), ONEOK (OKE), and Kinder Morgan (KMI).
The volatility in crude oil prices impacts ETFs and ETNs such as the United States Oil Fund (USO), the VelocityShares 3x Long Crude Oil ETN (UWTI), SPDR S&P Oil & Gas Equipment & Services (XES), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
Browse this series on Market Realist:
