Crude Oil Storage Report - Feb. 18

[dan_s]

February 18, 2016
CRUDE OIL INVENTORY/’000 bbls
(Week Ended 2/12/16)

Current: 504,105
Actual Build/(Withdrawal): 2,147
Economist Average Estimate: 2,861
Previous: 501,958

The American Petroleum Institute said late Wednesday that the U.S. crude inventory dropped by 3.3 million barrels last week. Analysts had expected supplies to rise by around that amount. The API and EIA storage numbers are often different because both agencies use formulas to arrive at their numbers. The traders react to these storage reports, but they are nothing more than scientific wild ass guesses ("SWAGs").

The commonly held view is that crude oil supply exceeds demand by 1.5 to 2.0 million barrels per day. So, where is all of this extra oil going if during the last two weeks U.S. storage is about the same? Making this even more "interesting" is that Q1 is the lowest demand period for the year.

For those of you worried about it, the U.S. has approximately 640 million barrels of above ground oil storage capacity. This includes field level storage and pipeline fill; both of which are included in the weekly EIA storage numbers. The EIA has no way of knowing field level storage. It is a great big SWAG in their formula for coming up with the weekly storage numbers.