Slide 6 of 26
- The most recent data show OECD inventories remaining at very low levels.
- EIA expects inventories to remain low through the coming year. This increases the potential for price volatility through the rest of the winter, and into the next gasoline season.
- Inventories are a good measure of the supply/demand balance that affects prices. A large over-supply (production greater than demand) will put downward pressure on prices, while under-supply will push prices upward.
- As global oil production changed relative to demand, the world moved from a period of over-supply in 1998 to one of under-supply in 1999 and 2000.
- OECD inventories illustrate the changes in the world petroleum balance. OECD inventories rose to high levels during 1997 and 1998 when production exceeded demand and prices dropped to around $10 per barrel in December 1998. However, when demand exceeded production in 1999 and early 2000, inventories fell to low levels, and prices rose, averaging almost $35 per barrel (WTI) in November 2000.