Crude oil inventories for the latest week were released earlier today, and for the fifth straight week showed an unexpected decline. Now, we often comment about economists’ consensus forecasts for various indicators and how they often vary widely from the actual reported number, but the recent track record of traders predicting the weekly inventory print from the DoE is a joke. In this week’s report, consensus expectations were for stockpiles to increase by 1.5 million barrels, but the actual change was a decline of 2.976 million barrels.
As shown in the chart below, crude oil inventories have continued to decline in recent weeks even as we are now in a seasonal period where inventories have started to rise. Even with the recent declines, though, crude oil stockpiles are still above levels they were at this time last year and much higher than the average levels of the last ten years or going all the way back to 1984. To illustrate, at current levels crude oil stockpiles are 171 million barrels (48%) above average for this time of year. So, there’s still that, but if you are bullish on crude oil prices, things are moving in the right direction of late.
Getting back to the dismal record of traders predicting the weekly change in crude oil stockpiles, the chart below shows the rolling 5-week spread between the actual reported change in inventory levels and the consensus forecast. At an average spread of more than 7.7 million barrels, traders have overestimated the weekly change in inventories over the last five weeks by the widest margin since at least 2003.