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Gasoline Inventories Are Expected to Rise More

Crude Oil Prices Have Tumbled 25% in 2016: How Long Will It Last?

(Continued from Prior Part)

API gasoline and distillate inventory

The API (American Petroleum Institute) reported that US gasoline inventory rose by 3.1 MMbbls (million barrels) for the week ended February 5, 2016. Distillate stocks are also expected to rise by 1.7 MMbbls for the same period. The API added that Cushing crude oil stocks rose by 0.72 MMbbls for the same week.

EIA gasoline and distillate inventory and estimates

The EIA (U.S. Energy Information Administration) will release its weekly petroleum status report on February 10, 2016. US gasoline inventories rose by 5.9 MMbbls to 254.4 MMbbls for the week ended January 29, 2016. Market surveys project that gasoline inventories could rise 0.41 MMbbls for the week ended February 5, 2016. The EIA reported that distillate stocks fell by 0.8 MMbbls to 159.7 MMbbls for the week ended January 29. Market surveys expect that distillate stocks will fall 1.6 MMbbls for the week ended February 5, 2016.

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The consensus of rising gasoline stocks suggests more supplies or less demand. It will negatively affect gasoline prices and crude oil prices. Gasoline prices fell 6% to $0.89 per gallon in yesterday’s trade. It’s the lowest settlement since December 2008. To know more about crude oil prices and crude oil inventories, read the first and second parts of this series.

The current gasoline and distillate inventories are 8% and 16% more, respectively, than the five-year averages. Rising US crude oil inventory and refined products inventory will put pressure on oil producers such as Hess (HES) and Conoco Phillips (COP). But a wide contango market and rising US inventories benefit oil tankers such as Teekay Tankers (TNK), Frontline (FRO), DHT Holdings (DHT), and Tsakos Energy Navigation (TNP).

The roller coaster ride in crude oil prices affects ETFs and ETNs such as the United States Oil Fund (USO), the VelocityShares 3x Long Crude Oil ETN (UWTI), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

Read the next part of the series to know more about the Brent and WTI spread and its effect on oil refiners.

Continue to Next Part

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