• Oil prices declined this week after the U.S. Energy Information Administration’s (EIA) Weekly Petroleum Status Report revealed that stockpiles of gasoline in the U.S. unexpectedly rose approximately 1.5 million barrels last week.1,2 The report was a reversal from recent weeks’ declines and was far above the consensus forecast for a nearly 2 million barrel inventory draw.3
  • Looking beyond the oil market’s daily price swings, however, a constructive supply-demand dynamic appears to be emerging through the remainder of 2017.2
  • In fact, oil markets are gradually working their way through the oversupply of recent years, a sign that OPEC’s November 2016 decision to cut output has been slowly taking effect.
  • Should OPEC extend the agreement at its May 2017 meeting, both the IEA and OPEC generally agree in their forecasts that oil inventories, which were estimated to be as high as 1.9 million barrels per day in early 2016, will be drawn into negative territory in the second half of 2017.4
  • The IEA looks for oil inventories to decline by as much as 1.8 million barrels per day in the fourth quarter of 2017, while OPEC forecasts a more modest decline of approximately 500,000 barrels per day.4


1 Bloomberg, based on CME data.
2 Federal Reserve Bank of St. Louis, http://bit.ly/292Tgue.
3 U.S. Energy Information Administration, http://bit.ly/1V2gPZQ.
4 Reuters, http://reut.rs/2pIb3Tl.


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