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OPEC Puts Oil Markets On Edge

Rig

Friday June 1, 2018

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

Key Takeaways

- U.S. oil production has hit 10.769 million barrels per day, yet another record. After only marginal gains in the last few weeks, the strong 44,000 bpd weekly increase eased concerns that infrastructure bottlenecks were restraining production growth.
- Still, bottlenecks are a concern, resulting in a wider WTI discount this week.
- WTI weakness, however, led to a large increase in U.S. crude oil exports.
- The crude stock draw was larger than expected, but it didn’t do much to rescue oil prices.

1. Inventories back to average

(Click to enlarge)

- The oil market is tighter than at any point in the last few years. The metric that most analysts (and OPEC) have been watching is the level of oil inventories relative to the five-year running average.
- Inventory levels exploded during the downturn, with OECD stocks surpassing 3 billion barrels. That coincided with a period in which oil prices plunged below $30 per barrel.
- The OPEC cuts helped drain inventories. Since the beginning of 2017 when the deal began, OECD stocks have declined by 234 million barrels through April 2018.…

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