The United States is no longer over-supplied with oil. That sounds like good news. The bad news is that it may signal lower oil prices going forward. An unexpected 9 million barrel (mmb) crude oil withdrawal from storage this week moved comparative inventory (C.I.) below the 5-year average. That shifted C.I. to into negative territory at -5 mmb for the first time since September 2018. The bad news is that it crossed the 5-year average at about $55/ barrel. That crossing point is called the mid-cycle price, the clearing price of the marginal barrel needed to maintain adequate supply through the current supply-demand cycle (Figure 1). (Click to enlarge) Figure 1. Comparative inventory road map. Mid-cycle price is the clearing price of the marginal barrel needed to maintain adequate supply through the current supply-demand cycle. Source: Aperio Energy Research Figure 2 shows the real-world comparative inventory-WTI price cross-plot for […]