24 Oct

Oil Bears Track OECD’s Crude Oil Inventories

WRITTEN BY Gordon Kristopher

OECD’s crude oil inventories 

The EIA (U.S. Energy Information Administration) estimates that OECD’s (Organisation for Economic Cooperation and Development) oil inventories rose by 2.5 MMbbls (million barrels) to 2.98 MMbbls in September 2017—compared to August 2017. OECD’s crude oil inventories rose 0.1% month-over-month. However, the crude oil inventories have fallen by 64.7 MMbbls or 2.1% year-over-year. The inventories have also fallen by 64 MMbbls or 2.1% since January 2017 due to the ongoing output cut deal and improving global oil demand. The fall in OECD’s oil inventories could help rebalance the oil markets.

A fall in OECD’s crude oil inventories could have a positive impact on crude oil (BNO) (USL) (USO) prices. Volatility in oil prices impacts oil producers (IYE) (IEZ) like Rosneft, Saudi Aramco, PDC Energy (PDCE), Shell (RDS.A), and Cobalt International Energy (CIE).

Oil Bears Track OECD’s Crude Oil Inventories

EIA’s estimate  

The EIA released its STEO (Short-Term Energy Outlook) report on October 11, 2017. It estimates that OECD’s oil inventories will average 2.96 MMbbls in 2017—1% lower than the estimates from the September STEO report because of the ongoing output cut deal. The EIA also estimates that OECD’s oil inventories will average 3.02 MMbbls in 2018—1.4% lower than previous estimates. The estimates could be reduced more if major producers extend the ongoing output cut deal until December 2018.

OECD’s oil inventories averaged 2.967 MMbbls in 2015. The inventories fell slightly to 2.966 MMbbls in 2016.

Impact

OECD’s crude oil inventories are near a ten-month low. They have fallen 3.5% since the all-time high in July 2016. The output cut deal and Saudi Arabia’s export plans could help draw down global oil inventories. The fall in OECD’s oil inventories could help crude oil (DBO) (BNO) (SCO) prices.

In the next part, we’ll discuss how the global crude oil supply outage impacts crude oil prices.

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