Oil inventories and their five-year average
In the week ended September 14, US crude oil inventories were 3% below their five-year average and flat from the week prior. Oil prices and the inventories spread usually move inversely, as shown in the chart above. If the inventories spread expands further into negative territory, it could support oil prices in the coming weeks.
Oil prices, energy stocks, and the inventories spread
Since the EIA’s (U.S. Energy Information Administration) data release on September 19, US crude oil November futures have risen 1.9%. Between September 19 and yesterday, oil-weighted stocks Oasis Petroleum (OAS), Denbury Resources (DNR), and California Resources (CRC) rose 6%, 10%, and 15.2%, respectively, and outperformed their peers. Since September 19, the S&P 500 (SPY) and the Dow Jones Industrial Average (DIA) have risen 0.4% and 0.6%, respectively. These indexes’ energy components are sensitive to oil prices.
Fall in inventory levels
Tomorrow, the EIA is scheduled to announce its US crude oil inventory data for last week. A Reuters poll has indicated a 1.67 million-barrel decline in oil inventories. The inventories spread will likely remain at -3% if the EIA data matches the poll, which could help oil prices sustain their gains.