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The Oil Market's Looking Alright



  • In this piece, I decided to look at some recent oil-related data to see how the market, as a whole, is looking in the US
  • Some datapoints are far from great and need improving, but some pieces look nice for oil bulls
  • Add to this the fact that inventory changes appear bullish compared to the past, and I don't mind this space

Oil prices have continued to gyrate recently but have at least ticked up a bit after some positive news broke that inventories in the US took a sizable move lower. As an investor in this space and somebody who follows the data rather closely, I figured it would be interesting to dig into the numbers and give my thoughts about why the evidence continues to point toward a mostly bullish picture that investors in oil-related companies and ETFs should appreciate.

Inventories fell nicely

*Created by Author

According to the EIA (Energy Information Administration), crude stocks during the past week have taken a meaningful step lower. If their estimates are accurate, crude inventories for the week came in at 495.4 million barrels. This represents a decrease of 7.5 million barrels from the 502.9 million seen a week ago. It should be mentioned that, although this drop was worse than the 8.1 million barrel decline estimated by the API (American Petroleum Institute), it was more than triple the 2.45 million barrels that analysts forecasted would come off the market. In the graph above, you can see the trend that stocks have taken over the past 52 weeks and, in the graph below, you can see the same graph but zoomed-in on so that you can more easily see weekly fluctuations.

*Created by Author

Fortunately, though, crude stocks weren't the only area to improve. Take, for instance, motor gasoline stocks, which fell by 1.6 million barrels down to 235.7 million barrels. Residual fuel stocks fell even more, to the tune of 1.8 million barrels down to 34.9 million, and kerosene-type jet fuel inventories dropped 0.7 million barrels to 40.3 million. The lowest decline, it seems, came from fuel ethanol stocks, which contracted by a modest 0.4 million barrels to 21.2 million.

It should

This article was written by

Daniel Jones profile picture

Daniel is an avid and active professional investor.

He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

I watched in details from you on the oil demand and supply. you had in your KMI update mentioned confidence that Oil price to surpass 53 ( or 60 as said). Next monday will have the Opec meeting, Consensus are there is no cut or cap ( ?) for opec. Friday morning, it was suggested SA pumps more than expected oil in july, thursday afternoon, it was reported that SA will lowered its output by 900K. The news are so confused and mixed. What is your take on that??
Randy - Electric car forecast as requested:

Bloomberg’s report forecasts that electric vehicles will account for more than half of all new light-duty vehicle sales globally by 2040, up significantly from their 2016 forecast. They believe this would displace 8 million barrels per day of transport fuels by 2040 which is a big number.

Volvo to make only electric cars after 2019

France Plans to End Sales of Gas and Diesel Cars by 2040

All Cars In Norway Will Be 100% Electric By 2025

India to sell only electric cars by 2030

China: 12% Electric Cars By 2020
Randy W profile picture
Thanks for putting all of this in a clear, concise form. Looks like things are slowly getting better. Love to hear your input on the electric car forecasts...
waqas111 profile picture
I agree with u Dan and as per U :
" I believe there's a good chance of continued stock draws and, if so, it wouldn't be unreasonable to anticipate an increase in energy prices and the prices of stocks tied to energy"

True and may go on like this for probably 2 more weeks until OPEC's July report and then you will c more production increases from opec king pin and his cronies as i predicted CORRECTLY the June OPEC production rises by some members. Unfortunately for the bulls the uptick in OPEC production will continue for 2 more months until August of this year and then the US driving season will come to an end. Sorry !

I am not an uber-bearish and don't intend to see price dropping to $30 or $40. However i am satisfied with $50 and that's it !! Any further increase will remind me of Nicelback's song "This means war" with the bulls.
thanks daniel for your articles ! what do you think about LGCY ?
LGCY has a chance with all the geopolitical risk currently
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