Saturday, May 25, 2013

US Crude Oil Inventory: 30+ Year High

US crude oil inventory is at a three decade high.  From Barron's (a free preview):
There are a number of reasons for oil prices to fall: U.S. demand is slumping, Middle East output is steady, growth in China is slowing, and market prices are well above production costs for even the most expensive barrels. The Organization of the Petroleum Exporting Countries added to the bearish picture this month with a warning that global demand growth could slow this year.
The chart from the EIA's website of weekly crude inventory. 
US crude oil inventory.
The Barron's article also mentions that the S&P 500 and WTI oil have been in lock step.  I feel that for the past six months, the major indices have been on a tear while oil has remained rather stable, although the Brent-WTI spread is dropping. Similarly related, why did WTI oil (and the Nikkei 225) drop this past week?  I would lean toward recent release of Markit's Chinese manufacturing index, which shows weakening in Chinese manufacturing (thought here is still an expansion in stocks of finished goods).
S&P500/WTI oil price (spot) - past 5 years.

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