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What drives oil prices? The balance of Oil inventories.

Points to be taken from this read

 

Inven­to­ries act as the bal­anc­ing point between sup­ply and demand.

The rela­tion­ship between prices and inven­to­ries allows for effects in either direction. 

Some oil pro­duc­ing coun­tries pub­lish their inven­to­ry num­bers irreg­u­lar­ly, if at all. 

 

Disclaimer

Most of the infor­ma­tion here comes from the U.S. Ener­gy Infor­ma­tion Administration’s web­site (EIA) and some from Wikipedia. I am not pre­tend­ing to come up with all this infor­ma­tion myself. The only thing I did was go through the infor­ma­tion and put togeth­er pieces of it to make it eas­i­er to under­stand and access for myself. This, I want to share with you and I hope it ben­e­fits you in some way. All the praise goes to the good peo­ple that put this up on the EIA and Wikipedia website.

 

Please go over to these respec­tive web­sites for a lot more information:

 

EIA on the bal­ance of ‘What dri­ves Crude Oil’

https://www.eia.gov/finance/markets/crudeoil/balance.php

 

Keep­ing it simple

As I tried explain­ing in the dis­claimer this post is just going to be the sum­ma­riza­tion of ‘facts’ I have found on the inter­net. Sort of like a cheat sheet for any­thing on the bal­ance of crude oil. Above you can find the sources for the infor­ma­tion list­ed here so head on over and look up more details if you wish.

 

So here it goes…

 

How do oil prices get influ­enced by the balance?

 

Inven­to­ries

 

Refiner­ies and stor­age ter­mi­nals can store crude oil and/or fin­ished prod­ucts like motor gaso­line, heat­ing oil, and diesel to pre­pare for sea­son­al fluc­tu­a­tions, refin­ery main­te­nance, or unex­pect­ed weather. 

 

Future expec­ta­tions

Because inven­to­ries can sat­is­fy either cur­rent or future demand, their lev­el is sen­si­tive to the rela­tion­ship between the cur­rent price of oil and expec­ta­tions of future prices. 

The rela­tion­ship between prices and inven­to­ries allows for effects in either direction. 

 

Pub­li­ca­tions

The U.S. Ener­gy Infor­ma­tion Admin­is­tra­tion pub­lish­es week­ly, month­ly, and annu­al inven­to­ry sta­tis­tics for crude oil and its relat­ed products. 

Indus­tri­al­ized coun­tries that belong to the Orga­ni­za­tion of Eco­nom­ic Coop­er­a­tion and Devel­op­ment (OECD) coun­tries usu­al­ly pub­lish inven­to­ry sta­tis­tics on a reg­u­lar basis.

 

Real num­bers not always available

How­ev­er, inven­to­ry data for oth­er countries—including key devel­op­ing coun­tries with rapid­ly grow­ing oil con­sump­tion as well as major pro­duc­ing countries—is some­times avail­able on a less time­ly basis, or in some cas­es, not avail­able at all. 

 

Thanks for reading

 

I hope this post helps to make the rela­tions between OECD mem­bers and non-OECD coun­tries more clear in terms of the demand of the world’s oil and thus oil prices.

If you like what I’m doing here please leave a quick com­ment. It will be much appre­ci­at­ed. Trolls are still wel­come as well. And sub­scribe to my newslet­ter if you like. 

 

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