Energy Prospectus

CRUDE OIL INVENTORY/’000 bbls (Week Ended 1/23/15)

Current: 406,727
Actual Build/(Withdrawal): 8,874
Economist Average Estimate: 4,000
Previous: 397,853

Chart: http://www.oilandgas360.com/analytics/c ... 4-26406629

It is normal for storage to build this time of year, but U.S. inventory is running way above the 5-year average. See chart above.

Remember that oil goes to storage because it is directed to go there by the owner of the oil. Companies are stocking up on cheap oil today because they see much higher prices coming in the future. For example, the December 2015 NYMEX futures contract for WTI is trading around $53.60/bbl today. Our own government should be taking advantage of today's low oil prices to add to our Strategic Oil Reserves. When (not if) Iran gets their nukes, it would be nice to have a big supply to fall back on.

The EIA is now saying that U.S. onshore production will peak within six months and begin to decline during the 3rd quarter. I will have more on this in next week's edition of The View From Houston.

http://blog.propell.com/is-there-a-new- ... bfa20252e3

The Energy Information Administration (EIA) announced yet another build that exceeded analyst estimates, reporting gains of 8,874 barrels for the week ended January 23, 2015. The gain pushed total inventories up to 406,727 barrels, the highest on record. Based on Bloomberg data reaching back to the 1980’s, the total has never cracked the 400,000 mark.

Total gains in the last three weeks have amounted to a build of 24,334 barrels overall. It is the largest three-week gain since March of 2001.

I think a lot of this is refiners building as much low cost inventory as they can in anticipation of higher oil prices to come. That is the smart thing for them to be doing.