OECD’s crude oil inventories
The EIA (U.S. Energy Information Administration) estimates that OECD’s (Organisation for Economic Cooperation and Development) crude oil inventories rose by 2.31 MMbbls (million barrels) or 0.1% to 3,021.5 MMbbls in May 2017—compared to April 2017. However, inventories fell 0.4% from the same period in 2016. OECD crude oil inventories hit 3,019 MMbbls in April 2017—the lowest level in six months. The year-over-year fall in oil inventories would have a positive impact on crude oil (VDE) (IEZ) (XES) (USO) prices.
OPEC (Organization of the Petroleum Exporting Countries) released its Monthly Oil Market Report on June 13, 2017. It reported that OECD countries’ oil inventories fell by 15.9 MMbbls to 3,005 MMbbls in April 2017—compared to March 2017. It’s 21.1 MMbbls lower than the same period in 2016. However, inventories are 251 MMbbls more than the five-year average.
Oil inventories in 2017 and 2018
According to the EIA, OECD’s oil inventories averaged 2,860 MMbbls in 2015 and 3,024 MMbbls in 2016. The EIA forecast that OECD’s oil inventories could fall to 3,019 MMbbls in 2017 and rise to 3,028 MMbbls in 2018.
Impact of OECD’s crude oil inventories
The expectation of a fall in OECD’s oil inventories in 2017 could support crude oil prices in 2017. Saudi Arabia’s crude oil exports to the US and Asia could fall in the coming months. It would draw down US and global crude oil inventories. Peak summer demand for crude oil in Saudi Arabia could also lead to a rise in domestic crude oil consumption. It would also draw down domestic inventories in Saudi Arabia. Saudi Arabia’s energy minister said that global crude oil inventories could fall below their five-year average by the end of 2017.
In the next part, we’ll discuss some crude oil price forecasts.