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Oil Inventories Fall, But OPEC’s Problems Persist

Friday July 14, 2016

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.

1. Oil inventories decline counter-seasonally

(Click to enlarge)

- As Bloomberg Gadfly points out, the U.S. posted a highly unusual drawdown in crude inventories in the March through June period, with exceptional declines in June.
- The declines rescued oil prices from cratering below $40 per barrel, a rout that began after disappointment of OPEC’s May meeting.
- But inventories are still high and follow a strong build in the first quarter. Also, as Goldman Sachs said in a recent note, the drawdowns are still early.
- Moreover, a lot of the oil has been exported, as U.S. oil exports surge to record highs. As a result, the drawdowns are not clearly a sign of a tightening market, as the crude could simply end up exacerbating supply problems elsewhere.
- Bloomberg Gadly notes: “The U.S. exported 149 million more barrels of crude and refined products in the four months through June than it did in the same period of 2016. Had those barrels not been exported, U.S. inventories would have risen by another 129 million barrels.”

2. Oil inventories coming down…slowly

(Click to enlarge)

-…

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