Although it is typical for crude oil inventories to decline at this time of year, this week’s decline was much larger than consensus expectations. While traders were expecting crude oil stockpiles to fall by 1.6 million barrels, the actual reported decline from the DoE was more than twice that at 4.346 million barrels. As shown in the chart below, crude oil inventories are still well above their historical averages since both 1983 and over the last ten years. In fact, for the current week of the year, crude stockpiles are 126 million barrels, or 36%, above their average since 1983.
Although crude oil inventories remain well above average, there has been a real shift in inventory trends over the last six months. After a record 16 straight weeks of inventory builds from early January through late April, US crude oil stockpiles have now declined in 9 of the last 11 weeks. The chart below of the 10-week rolling change in inventory levels does a good job capturing this shift. After hitting a record 10-week build of 79.1 million barrels in late March, the rolling 10-week change has now dropped by more than 25 million barrels. Much of this shift has been seasonal in nature, but the builds we saw earlier this year were extreme under any measure.