US crude inventories are well off the highs - Westpac

A near term positive sign for oil market is that US crude inventories have fallen back to levels that are ‘normal’ for this time of year, according to Justin Smirk, Research Analyst at Westpac.

Key Quotes

“Indeed, though February the level of inventories is only just slightly higher than the average over the previous 5 years. No longer are US inventories an excessive weight on US crude prices.”

“This is not only a US phenomenon. Globally, floating storage of crude is down 21% in the year to February to be just 6% higher than the February average through the previous 5 years. At the peak, floating inventories were 80% larger than their five year average. With much tighter inventories near term political risks are having a bigger impact on prices. At the moment the fate of the Iran nuclear deal and/or a larger decline in Venezuela's production remain upside risks for prices.”