Crude oil inventories have been trending sharply higher since the beginning of the year. Excluding the strategic petroleum reserve, stocks of crude oil recorded 479,012,000 barrels per week at the end of 2016. As of March 10, 2017, this number was up to 528,156,000, a 10.3% increase in 10 weeks.

us-oil-figure1Figure 1 shows a graph of US oil inventories going all the way back to 1983. Inventory traded in a narrow range of 300 + or – 50 million barrels per week until 2015, when inventoried shot-up. The current level of 528 million barrels is a record high.

Figure 2 presents a graph comparing millions of barrels of inventory of West Texas Intermediate (WTI) us-oil-figure2on the left hand scale (blue line), to the price per barrel (orange line), on the right hand scale. Generally price moves in the opposite direction of inventory level (almost a mirror image), however this has not happened thus far in 2017. WTI prices have plateaued and were trading in a narrow range of between $51 and $54 per barrel (3/10/2017) year to date, per the US Energy Information Administration (EIA). Citing Bloomberg, today (3/21/2017) WTI intraday fell back to $47.34 for an April contract. One point does not a trend make, so we will have to wait and see what WTI prices do over the next several days.

At Gerdau we monitor energy prices, inventories and rig count as these variables influence the demand for engineered (Special Bar Quality) as well as construction steels.