Over the last 4 months, US crude oil inventory has been continuously falling, yet no major change to the oil price level has taken place. Since April 12, 2017 to date, US crude oil inventory has fallen by approximately 77.8 million from 535.6 million barrels to 457.8 million barrels. Back in April 12, 2017 -when US crude stocks started its decline- Brent crude oil price was somewhere around $53/bbl, and today Brent crude is still around $53/bbl despite the continuous decline in US crude stockpiles.
Why isn’t the decline in US crude oil inventories driving oil prices up as many have expected?
It is because the decline in US crude inventories is a result of a seasonal trend (summer season) rather than a market balance. A similar trend is seen in the graph below back in 2016. As September ends, stocks buildup resume again and with it, the pressure on oil prices will also increase.
