Slide 5 of 24
Notes:
U.S. crude oil inventories reflect the world situation. U.S. inventories were drawn down in 1999 as world demand exceeded world supply of crude oil as OPEC cut back on production.
Low crude oil inventories go hand in hand with low product inventories. Product inventories were also drawn down to help meet demand, as was seen with gasoline this Spring.
The rise in crude oil inventories earlier this year, while indicating an improvement in the market balance, appears to be short-lived, just as we had predicted a few months ago. Looking at U.S. crude stock levels in April and May can be misleading, since increases then were more reflective of the surge in WTI and U.S. product prices in the 1st quarter.
With U.S. crude oil stocks drawn down by more than 20 million barrels from the end of May to the end of August in 3 of the last 4 years, we were predicting in late June/early July that the U.S. crude oil market was likely on the precipice of a large summer stock draw. As of August 3, U.S. crude oil stocks have already fallen by 17 million barrels since the end of May.
