21 Mar

OECD’s Crude Oil Inventories: More Pain for Crude Oil Bulls?

WRITTEN BY Gordon Kristopher

OECD’s crude oil inventories

The EIA (U.S. Energy Information Administration) estimates that OECD’s (Organization for Economic Cooperation and Development) oil inventories fell by 14.5 MMbbls (million barrels) to 3,076 MMbbls in February 2017—compared to the previous month. OECD’s oil inventories fell 0.5% month-over-month, but rose 2.4% year-over-year. The fall in oil inventories is bullish for crude oil (SCO) (RYE) (DIG) (UCO) (IXC) prices. For more on crude oil prices, read Part 1 of this series.

OECD’s Crude Oil Inventories: More Pain for Crude Oil Bulls?

OPEC’s estimate

OPEC’s (Organization of the Petroleum Exporting Countries) Monthly Oil Market report stated that OECD countries’ oil inventories rose by 20.1 MMbbls to 3,022 MMbbls in January 2017—compared to the previous month. The inventories are 278 MMbbls above the five-year average.

IEA’s estimate

The IEA (International Energy Agency) estimates that OECD’s crude oil inventories rose by 48 MMbbls to 3,030 MMbbls in January 2017. It’s the first rise in inventories since July 2016. They’re also above the five-year average.

Oil inventories in 2017 and 2018

OECD’s oil inventories averaged 2,860 MMbbls in 2015. The inventories averaged 3,043 MMbbls in 2016. The EIA expects OECD’s oil inventories to average 3,084 MMbbls and 3,099 MMbbls in 2017 and 2018, respectively.

Impact of OECD’s crude oil inventories

Oil inventories were at the highest level ever in January 2017. OECD’s near-record oil inventories will pressure crude oil prices. Lower crude oil prices have a negative impact on crude oil and natural gas producers’ revenues such as Marathon Oil (MRO), Chevron (CVX), Synergy Resources (SYRG), and Sanchez Energy (SN). 

Crude oil price forecasts  

Commerzbank expects that Brent crude oil prices could trade between $50 and $60 per barrel in 2017 due to near-record US crude oil inventories and rising US crude oil production. Read Will Crude Oil Prices Test 3 Digits Again? and Hedge Funds Reduced Their Bullish Bets on Crude Oil for more on crude oil price forecasts.

Read What Can Investors Expect in the Crude Oil Market in 2017 for more on crude oil prices.

For related analysis, visit Market Realist’s Energy and Power page.

Latest articles

US crude oil production has more than doubled since 2009 and grew by 1.1% over the last year. Currently, there are 133 operable refineries in the US.

The cannabis industry is fighting against the ongoing US-China trade war and recessionary worries, which have hurt valuations across the global market.

Higher revenues, increased ticket prices, and lower fuel costs are likely to drive American Airlines' Q3 earnings higher despite its Boeing MAX woes.

HEXO plans to report its Q4 earnings before the market opens on October 24. October has been tough for Hexo, with its stock falling 31.2% as of October 18.

Today, Advanced Micro Devices (AMD) rose 4% to over $32, making it one of the top Nasdaq gainers. Morgan Stanley raised its price target for AMD stock.

Early in 2019, President Donald Trump warned that China could overtake the US as a global power. He vowed that this would not happen under his leadership.