Rising global liquid stocks have been attributed to the fact that global production of petroleum and other liquids has continued to outpace consumption since August 2014.
According to the Energy Information Administration, part of the US Department of Energy, total global liquids inventories are estimated to have grown by 2.3 million barrels per day in the first seven months of 2015. This is the highest level of inventory builds through July of any year since 1998.
As a result, downward pressure has been put on near-term crude oil prices.
It is estimated that global consumption of petroleum and other liquids grew by 1.1 million barrels per day in 2014, averaging 92.4 million barrels per day for the year. Global production of petroleum and other liquids has been higher also – growing by 2.3 million barrels per day in 2014.
While the annual increases in production have been similar, their sources have been different. For example, in 2014, most global liquids production growth was from countries outside of the OPEC, particularly in the US and production from OPEC fell.
However, in 2015, growth has so far come from both OPEC and non-OPEC countries.
These growing global oil inventories are increasing contango in the futures market. Since this consistent growth started in the third quarter of 2014, the difference between futures prices and near-term contracts has increased to reflect the increased crude oil supply and associated costs of growing storage needs.
The EIA forecasts that falling crude oil production in the US will help moderate oil inventory builds in the coming months, leading to slightly higher expected prices.