Conclusions

• Low U.S. Crude Oil Inventory Levels.

• Low OECD Days Supply

• Increased Risk for Volatility.

• OPEC?

  • Production Levels?
  • Price Band?
  • Cohesion?

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So to summarize:

• In the US specifically, on August 18, crude oil inventories were currently at very low levels (more than 11% below last year’s levels).

• In terms of Days Supply of Forward Demand, OECD oil inventories are also very low.

• With low inventories there is an increased risk of price volatility, as was seen in the distillate market last winter, and more recently, the gasoline market this summer.

• So the question comes back to what will OPEC do?
  • Will they increase production quotas?
  • Will they adhere to this $22-$28 price band?
  • Will OPEC cohesion crumble with increased production?

• Time will tell ...