9 Jan

Stockpiles Could Push US Crude Oil to a New 3-Year High

WRITTEN BY Robert Scott FEATURED IN Commodities

Oil stockpiles

For the week ending December 29, 2017, US crude oil inventories were at 424.5 MMbbls (million barrels)—a fall of 7.4 MMbbls based on the EIA (U.S. Energy Information Administration) data released on January 4, 2018. It was 2.2 MMbbls more than the market’s expected fall. On the same day, US crude oil prices rose 0.6%.

Stockpiles Could Push US Crude Oil to a New 3-Year High

Inventories spread

US crude oil inventories nearing or falling below their five-year average could boost oil (UCO) (BNO) prices. In the week ending December 29, 2017, this difference or the “inventories spread” was at 9.1%—10 basis points below the level the previous week. Inventories are ~9% above their five-year average, but the spread is falling. On December 1–29, 2017, the inventories spread or the difference between oil inventories and their five-year average narrowed continuously. Since December 1, 2017, US crude oil (OIIL) (USL) (DBO) prices have risen 5.8%. After the EIA’s recent data on January 4, 2018, US crude oil prices have only fallen 0.5%. An additional fall in the inventories spread could be important for oil bulls.

What’s the required fall in US oil inventories?

In the week ending January 5, 2018, a fall of more than ~0.65 MMbbls would reduce the inventories spread and could help oil prices reach a new three-year high. On January 8, 2018, US crude oil (USO) (USL) February 2018 futures were 0.5% below their three-year high. The EIA will report the data on January 10, 2018. The data will be important for oil prices.

Latest articles

Hibbett Sports (HIBB) stock surged 22.3% as of 1:54 PM ET today as the company reported impressive results for fiscal 2019's fourth quarter, which ended on February 2.

Wall Street analysts expect a potential upside of 21.63% for Alexion Pharmaceuticals based on the stock's closing price on March 21.

Today, we got another round of dismal data points from Europe (VGK)(EZU). According to a Markit survey, Germany’s (EWG) March PMI Composite Output Index fell to a 69-month low of 51.5.

On March 21, US crude oil’s implied volatility was 24.9%, which was 6.7% below its 15-day average. Usually, lower implied volatility supports oil prices.

The overall cannabis sector took a hit today amid the broader market's declines. The volatility index (VIX) jumped 17.9%, and the cannabis sector is more sensitive than the market.

The tech-heavy NASDAQ Composite Index (QQQ) is on track to post its 12th weekly gain in 13 weeks.