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API Crude Oil Stocks Suggest Crude Oil Prices Could Feel the Heat

API crude oil stocks

The API (American Petroleum Institute) is scheduled to release its weekly crude oil inventory report on Tuesday, May 3, 2016. The API reported that US crude oil inventory fell by 1.1 MMbbls (million barrels) between April 15, 2016, and April 22, 2016. The API added that Cushing crude oil inventories rose by 1.9 MMbbls during the same period.

EIA’s nationwide crude oil inventories and estimates

Tuesday’s API data is the precursor to the EIA’s (US Energy Information Administration) weekly inventory reported on Wednesday, May 4, 2016. Notably, nationwide crude oil inventory rose by 2 MMbbls (million barrels) to 540.6 MMbbls for the week ending April 22, 2016, as compared with the previous week. This was the highest level of US crude oil inventory in history. US crude oil inventories are 10% higher than in the same period in 2015.

Market surveys from Reuters estimated that US crude oil inventories would rise by 1.4 MMbbls (million barrels) in the week ending April 29, 2016, over the previous week. The preliminary surveys from Bloomberg suggest that US crude oil stocks rose by 0.5 MMbbls during the same period.

Impact of record nationwide crude oil inventories  

The record-high US crude oil inventory will put pressure on crude oil prices. Estimates of a further rise in US crude oil inventories will also add pressure to crude oil prices. Multiyear-low crude oil prices negatively affect oil producers like Carrizo Oil & Gas (CRZO), Cobalt International Energy (CIE), Bill Barrett (BBG), and Goodrich Petroleum (GDP).

Such rollercoaster rides in crude oil prices affect ETFs like the ProShares Ultra Oil & Gas (DIG), the United States Brent Oil (BNO), the Direxion Daily Energy Bull 3x Shares ETF (ERX), and the Fidelity MSCI Energy (FENY).

Continue to the next part for a discussion of OPEC (Organization of the Petroleum Exporting Countries) crude oil production and its effect on the crude oil market.

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