International Maritime Associates, Inc.

US Crude Oil Inventory

Crude prices are being held in check by the excess oil inventory overhanging the market. Global crude oil inventory in OECD countries has risen almost 25% over the past two years – and oil pricing will continue to be held in check until the level of oil inventory is worked down.

The oil inventory survey conducted weekly by the EIA provides a convincing indicator that crude stocks in the US are now declining. As shown below, crude oil inventory in the US peaked at the end of March – after increasing over the first thirteen weeks of 2017.   US crude inventory has fallen in nineteen of the twenty four weeks since March - and over the past twelve weeks crude inventory has fallen 35 million barrels.   US crude inventory (excluding stock in the Strategic Petroleum Reserve) totaled 473 million barrels as of 15 September.    The increase in inventory over the past three weeks was the result of Hurricane Harvey, which shut in production at several refineries and caused US refinery utilization to drop below 80%.  As refinery utilization returns to normal over the next few weeks, crude inventory will resume a downward trend.

US inventory data represent trends in only one area of the global oil market. But estimates for global oil inventory are notoriously weak – and industry analysts heavily rely on the weekly US oil inventory data as a surrogate for global inventory movement.