Oil inventories and their five-year average
In the week ending on December 21, US crude oil inventories were 7% higher than their five-year average—unchanged from the previous week. Oil prices and the inventories spread usually move inversely.
If the inventories spread expands into the positive territory, it could drag oil prices down in the coming weeks. The inventories spread is the difference between oil inventories and their five-year average.
Oil prices, energy stocks, and the inventories spread
Since the latest EIA (U.S. Energy Information Administration) data were released on December 28, US crude oil February futures have risen 0.2%. On December 28–31, oil-weighted stocks Occidental Petroleum (OXY), Whiting Petroleum (WLL), and WPX Energy (WPX) rose 1.5%, 2.2%, and 2.8%, respectively, and outperformed their peers.
Fall in inventory levels
On January 4, the EIA is scheduled to announce its US crude oil inventory data for last week. A fall of more than ~8.4 MMbbls (million barrels) for the week ending on December 28 would help contract the inventories spread. The five-year average has also fallen by 4.1 MMbbls during this time of the year.