U.S. Crude Oil Inventory Outlook

Sources: History: EIA; Projections: Short-Term Energy Outlook, January 2001.

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• Consistent with OECD inventories, U.S. inventories are low. They have been well below the normal range for over one year.

• Crude oil stocks in the United States, while tending to increase of late toward more normal levels, remain well below average. As of December 29, crude oil stocks were nearly 289 million barrels, about 4% below the 5-year average.

• Near-term tightness in U.S. crude oil markets have kept current prices above forward prices, reflecting current strength in crude oil demand relative to supply.

• Relatively strong U.S. oil demand next year should keep crude oil demand high and inventories relatively low, probably through all of next year. Low inventories raise the risk of price volatility.