85 comments on Tight storage may lead to huge oil price drop
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85 comments on Tight storage may lead to huge oil price drop
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Here is the US Crude Oil Days of Supply graph from the EIA:
I think that it is pretty clear that the industry has been moving toward a Just In Time inventory system in the 20 year or so time period from about 1984 to 2004, primarily IMO because they have the SPR as a backstop. It looks like 1995 was the inflection point between an average of over 25 Days of Supply to an average of less than 25 Days of Supply. So, recent inventory levels are high based on five year numbers, but not based on pre-1995 numbers.
Having said that, it seems to me that something's gotta give. I don't see how we can keep seeing a combination of rising oil prices and rising inventories.
As long as the Fed keeps printing money and giving it to the banks, we can keep seeing a combination of rising oil prices and rising inventories and just about anything else that normally wouldnt make sense.