by Bill O’Grady

The Market
Since mid-Q1, oil prices have ranged from a low of around $64 to a high of $71 per barrel.

Prices remain elevated, supported by OPEC production discipline, production problems in several OPEC nations, fears of new Iran sanctions and stable global oil demand.

Prices and Inventories
Inventory levels remain elevated but have clearly declined from last year’s peak.

From the late 1970s into mid-2014, U.S. commercial crude oil inventories ranged between 275 mb and 400 mb.  However, from mid-2014 into 2017, rising U.S. production led to a major increase in stockpiles.

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by Bill O’Grady

The Market
Over the past quarter, oil prices have ranged from a low of around $56 to a high of $66 per barrel.

Prices remain elevated, supported by OPEC production discipline and solid global oil demand.

Prices and Inventories
Inventory levels remain elevated but have clearly declined from last year’s peak.

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by Bill O’Grady

The Market
Oil prices have recovered strongly from the mid-summer lows.  It appears we are establishing a new trading range between $55 and $60 per barrel.

This recovery was mostly caused by a steady decline in U.S. domestic crude oil inventories, a weak dollar and OPEC output discipline.  We expect OPEC to maintain output restrictions until the Saudis price their partial IPO of Saudi Aramco sometime in 2018.

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by Bill O’Grady

The Market
Oil prices peaked in March around $55 per barrel.  There have been a series of lower highs and lower lows, as shown by the lines on the chart.

This obvious downtrend has led to a general bearish tone to the market.  We don’t necessarily share that level of pessimism; as we will show below, dollar weakness and falling inventories are supportive for oil prices.  On the other hand, there are legitimate concerns that Saudis may reverse production restrictions after next year’s initial public offering for Saudi Aramco.

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by Bill O’Grady

The Market
Since December, oil prices have been ranging between $48 and $55 per barrel.

Prices and Inventories
Inventory levels remain elevated, reaching historic highs.

In the above charts, the one on the left shows the long-term inventory situation, while the chart on the right shows a 12-year history.  Normal inventories would be below 400 mb, so stockpiles remain elevated.

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