Crude Oil Prices Resume a Downtrend in the Bear Market
(Continued from Prior Part)
EIA inventory report
On August 5, 2015, the EIA (U.S. Energy Information Administration) published its weekly crude oil inventory report. The EIA report showed that the US crude oil stockpile fell by 4.4 MMbbls (million barrels) to 455.3 MMbbls for the week ending July 31, 2015. Likewise, oil stocks fell by 4.2 MMbbls to 459.7 MMbbls for the week ending July 24, 2015. Crude oil inventories fell for the seventh time in the last ten weeks.
On average, market surveys from Bloomberg to Reuters projected that crude oil inventories could fall by 1.5 MMbbls for the week ending July 31, 2015. The better-than-expected inventory fall supported US crude oil prices in the first half of trading in yesterday’s trade.
Refined products’ inventory
The EIA report also added that gasoline inventories rose by 0.811 MMbbls for the week ending July 31, 2015, against the market consensus of a fall in the stockpile by 0.5 MMbbls. Likewise, distillate inventories rose by 0.709 MMbbls for the week ending July 31, 2015. The unexpected rise in gasoline inventories along with distillate stocks dragged crude oil prices lower in the second half of yesterday’s trade in the depressed crude oil market. Crude oil inventories fell due to a rise in refinery demand and fall in US crude oil imports.
The US refinery utilization was at 96.10% of its operable capacity for the week ending July 31, 2015. Crude oil deliveries to refineries rose by 313, 000 bpd (barrels per day) to 17.1 MMbpd (million barrels per day) over the same period—compared to the previous week.
US crude oil imports fell by 365,000 bpd to 7.2 MMbpd for the week ending July 31, 2015. In the last four weeks, the average crude oil imports were at 7.5 MMbpd. It’s 0.40% lower than the crude oil imports during the same period last year.
The collateral damage in the crude oil market negatively impacts US oil producers like Murphy Oil (MUR), Marathon Petroleum (MRO), and Noble Energy (NBL). Combined, they account for 3.64% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is greater than 35% of their total production. Falling crude oil prices also impact energy ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
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