Oil inventories will always affect crude oil price in MCX INDIA. Usually the U.S Energy Information Administration releases oil inventory report on Wednesdays. EIA is a principal agency which covers data on coal, petroleum, electric, natural gas, renewable and nuclear energy. It is responsible for analyzing, and disseminating energy information to promote sound policy making.
EIA distribute its products details, analyses, reports to customers first through its website and the customer contact center after conducting a broad data collection program that covers the full range of energy sources.
US and the oil demand
EIA measures the weekly changes in the number of barrels of commercial crude oil held by US companies.Upward movement in the US stock market could support oil demand and its price. US is the largest crude oil consumers. Inventory level will influence the price of petroleum products. Which affect crude oil price. Russia and Saudi Arabia were pumping more than 10 million barrels of crude oil in a day. So it becomes the two biggest crude oil producers in the world.
The EIA weekly releases its petroleum status report. The crude oil price will boost If the government agency reported a rise in the US crude oil inventory as compared to the foregoing week. However, crude oil price increases if the US crude oil inventory increases less than what we expected.
When US crude oil inventory boost?
If there is an increment in the imports rate the US crude oil inventory will rise. EIA collect data mainly from five storage regions: the East Coast, Midwest, Gulf Coast, Rocky Mountain, and West Coast regions. If the crude oil inventory is higher than in the corresponding period in the previous year it will limits the upside potential for crude oil prices. Record-high US crude oil inventory benefit crude oil tanker companies like Nordic American Tankers, Tsakos Energy Navigation, and Teekay Tankers.
API’s Crude Oil Inventories Impact on Crude Oil Prices
Inventories of OPEC, Russia, Iraq, and OECD will help for the Oil Market. The bullish US stock market can have an impact on oil price and demand. Higher crude oil price have a larger impact on gas and oil producers. In the report released by API(American Petroleum Institute) on May 16,2017 it is mentioned that the US crude oil inventories could have fallen by 2.3 MMbbls. A deflation in oil inventories could support US crude oil prices.
Impacts of crude oil production of OPEC and Russia’s
EIA report that, as compared to March 2017 in April 2017 the production of crude oil rose by 90,000 bpd to 31.71 MMbpd. This is the first time production growth within the last five months. Major producer’s production cut deal is the main reason behind the production falls from December 2016 to March 2017. The fall in OPEC’s production create a bullish trend in crude prices. This will make a positive impact on (FENY) (FXN) (SCO) prices. This also has anoptimistic impact on oil and gas producers’ gain like ExxonMobil , Denbury, Resources, Northern and Triangle Petroleum (TPLM).
Russia is one of the largest crude oil producers in the world. In the report released by Russia’s Ministry of Energy estimate a reduction in the production of crude oil on April , 2017 as compared to the previous month. It fell by 50,000 bpd to 11 MMbpd in April 2017. A negative impact on crude oil prices and gas producer’s earnings will generate due to lower crude oil prices.
OECD’s Crude Oil Inventories impact on Crude oil prices
The EIA estimates a fall in crude oil inventories from 5.74 MMbbls (million barrels) to 3,027 MMbbls in April 2017 of OECD’s inventories. Monthly base analysis shows that oil inventory fell 0.2% but on yearly base it is rose by 0.6%. However, a fall in oil inventories means a bullish in crude oil price. And bullish for (VDE) (IEZ) (XES) (USO).
This decline in OECD’s oil inventories in 2017 create a positive impact on crude oil prices in 2017 and natural gas producers’ revenues.
The latest report from American Petroleum Institute (API) was really shocking. They reported against a Wall Street Journal analyst expectation. API reported 6.513 million barrels rise besides of The Wall Street Journal analyst report. They report 1.4 million barrels of draw down in crude oil inventories.
Three polled analysts expected a 2.5 million barrels of increment. And eight of them expected a 3.5 million barrels of decrement. But API reported substantially smaller build.
The API also saw a build in Gasoline inventories in a rate of 2.399 million barrels, for the week ending November 10. This is also against the expectation because a fall of 1.1 million barrels is expected. Analyst expect either a 3-million-barrel turn down or a 2-million-barrel turn up. Prior to the API release Brent benchmarks and WTI were shows a substantial drew down of about $2 per barrel as per last week record. According to API data, from the start of 2017 Crude oil inventories have a shed of 30.2 million barrels.
US crude oil inventories plays an important role in MCX crude oil trading, specially in future trading. It gives you a clear idea about commodity demand and supply. Commodity demand and supply awareness is very useful for MCX trading. Low inventories usually resulting in a lot of volatile future costs and increasing the danger of inventory exhaustion.
Beyond expectation if there is more increment in crude inventories, it results weaker demand and crude prices become bearish. Similarly if there is a reduction in crude inventories, it results greater demand and create a bullish trend for crude prices.
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