Crude oil inventories saw a monstrous build in the latest week, rising by 10.3 million barrels compared to expectations for a build of less than 4 million. This now makes it eight straight weeks of higher than expected inventories. What is even more amazing about this is the fact that consensus expectations have underestimated weekly inventory figures by an average of 4.5 million barrels each week! You would think that by this point, traders and analysts would have tweaked their models. The chart below shows crude inventories in 2015 and compares them to the historical average over the last ten years as well as since 1983. As shown, inventories have been going straight up so far this year, so much so that it seems that with each week’s report we have to adjust the y=axis of the chart higher. The lower chart shows where crude oil inventories currently stand relative to their historical average at this time of year. For the current week of the year, crude oil inventories are 116 million, or 34% above their historical average for this time of year. That’s nearly a week’s worth supply of excess inventory.
As mentioned above, crude oil stockpiles have been rising in recent weeks, but in order to appreciate the magnitude of the build, check out the chart below which shows the rolling eight-week change in inventories going back to 1983. At a current level of 62 million barrels, the last eight weeks have seen a record build in stockpiles, exceeding the prior record of 41 million barrels in 2001. In other words, the current eight-week increase exceeded the prior record by more than 50%!