The decline in U.S. comparative inventories since February is the most significant oil market development since prices collapsed three years ago. It means that U.S. demand has exceeded supply for most of the last 5 months. The main cause is lower net imports, not higher domestic consumption, and that is probably not sustainable. Comparative Inventories: The Key To Understanding Oil Prices Comparative inventory (C.I.) is the difference between current storage levels of crude oil plus a select group of refined products, and their 5-year average for the same weekly time period (Figure 1). It is an indicator that normalizes seasonal variations in production, consumption and refinery utilization. (Click to enlarge) Figure 1. Comparative Inventory Is The Difference Between Stock Levels & Their 5-Year Average. Source: EIA and Labyrinth Consulting Services, Inc. C.I. is the key to understanding oil prices yet few analysts use or even discuss it. Instead they […]