Yahoo Finance Crude Oil Inventories Are in a Downtrend: Fall in June 12 Week
Crude Oil Inventories Fall Again as Production and Demand Fall
Crude oil inventories
In its weekly Petroleum Status Report released on Wednesday, June 17, the EIA (U.S. Energy Information Administration) announced that crude oil inventories fell by 2.7 MMbbls (million barrels) for the week ending June 12.
Analysts were expecting a fall of 1.8 MMbbls.
What does it mean?
When inventories fall more than expected, it’s bullish for crude oil prices. This is positive for major oil producers like Hess (HES), ConocoPhillips (COP), Murphy Oil (MUR), and Oasis Petroleum (OAS). All of these companies are part of the iShares U.S. Energy ETF (IYE). They account for ~6.2% of the fund.
Background on crude oil inventories
Crude oil inventories touched a peak of 490.9 MMbbls in the April 24 week. It was the highest level in 80 years. Crude oil prices and energy companies had been battered by surging supplies. In the week ending May 1, inventories started falling for the first time in four months, as you can see in the above graph. This signaled an easing of the supply glut.
Since inventories started falling in May, they’re down ~23 MMbbls. Last week, inventories stood at ~468 MMbbls.
It remains to be seen if the downturn in inventories will go deep enough to sustain confidence in the energy industry. Production is a key thing to watch. We’ll discuss production in the next part of this series.
Importance of crude oil and inventories
Crude oil is one of the most important sources of energy for the world. Its refined products have several applications ranging from powering cars to building roads. The price of crude oil is important not only for individuals, but also for the world’s economies and industries. Supply and demand trends determine crude oil price trends. These trends can easily be gauged from trends in the crude oil inventory levels.
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