Crude oil inventories showed an unexpected decline even as traders were expecting last week’s monster drawdown to reverse itself partially. While traders were expecting crude stockpiles to increase by 4 million barrels, they actually declined by 559K. To put that in perspective, in the last two weeks traders have overestimated crude oil inventories by just under 20 million barrels! That’s a huge miss. In fact, it is the biggest overestimation over the course of a two week period since at least 2003. As shown in the chart below, crude oil inventories are now at their lowest levels since late February, which is pretty close to the seasonal pattern for this time of year. What is different this year, however, is that stockpiles are still more than 50% above their historical average for this time of year.
While crude oil inventories saw a modest decline, gasoline inventories saw a modest build. While traders were expecting stockpiles to drop by 1.1 million barrels, they actually declined by just a bit more than half a million barrels. Like crude oil, gasoline stockpiles are above average but not by nearly as extreme of an amount. As shown in the chart below, inventories have been following the season pattern very closely.