WTI crude oil Sept 7
WTI crude oil daily

I think it's settling into the market that there's more oil in the world that's being consumed than produced, somewhere in the neighbourhood of 2 million barrels per day. There are huge inventories of oil in the world but if the Saudis and Russians follow through, the days of supply should be around 55 by year end, which is the lowest in years and would correspond with around $100 brent. Now that's not the world's best metric but the main point is: When supply and demand are out of balance in oil -- even by just a bit -- there can be huge overshoots in prices if it's not corrected.

Here were the private oil inventory numbers from yesterday:

  • Crude -5521K
  • Gasoline -5090K
  • Distillates + 310,000

The consensus on today's report is -2064K, which is down from -1429K before the API numbers. We've seen some 'sell the fact' on inventory data but it's getting harder to do when it's week after week.