The single trend most telling in the US data is Imports. If the world is awash in oil, why has the US Import data risen even as US Production has fallen 1.2mil BBL/Day the past 12 months? US imports continue to push 12 month highs countering the downtrend in US Production.
The answer I think lies in the US Weekly Refinery Inputs. The US made numerous refinery upgrades earlier in the cycle which has created a definable uptrend since 2009. By installing more efficient equipment and catalysts, refiners can supply global needs with greater profit margins than competitors. The US has been actively doing this and requires a level of inventory to maintain refinery output.
The math is simple. If one is refining ~17mil BBL/Day then having inventories of 520mil BBLs is only 30dys of supply. 2 years ago US refinery inputs were at a low level of ~14.5mil BBL/Day and inventories at 410mil BBL represented a little over 28 days of supply.
We do not have adequate detail on oil Production/Consumption globally and many have made many inferences using only US data to represent global supply/demand. There are no trend changes in the US data which suggest we have an ‘oil glut’.
One would have expected a slow down in Imports even if US Production slumped. No signs of this!! There has certainly been a price change in WTI and Brent, but this has been correlated to the US dollar.
When all is said and done, I suspect global oil supply/demand is in rough balance and has for the most part been so all along. I think the past few years has been an exercise of Momentum Investor market psychology swinging from ‘Inflation Bets’ to ‘Deflation Bets’.
The next move in my opinion will be a swing back to ‘Inflation Bets’