Oil Tracker: Reconciling Extreme Draws With Stable Crude Prices
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Global visible oil inventories are drawing down at a record pace, yet crude futures prices remain relatively stable. This divergence is primarily driven by reduced risk premiums, inventory draws ahead of anticipated Strait of Hormuz reopenings, and slowing spot purchases. So far in April, global visible inventories have declined by an average of 6.3 million barrels per day, bringing cumulative draws since the conflict began to 474 million barrels.
Strait of Hormuz flows remain severely impaired at roughly 10% of normal levels, averaging just 2 million barrels per day on a four-day moving average basis. Even if the strait reopens, recovery will likely be gradual. The dislocation between physical and futures prices reflects a premium for near-term delivery, though the premium has recently narrowed from nearly $40 per barrel to approximately $10.
This pace of inventory depletion is unsustainable, as stockpiles have a natural floor. Once that floor is reached, demand destruction will become the primary balancing mechanism. Global offshore oil buffers are nearing exhaustion, with non-sanctioned seaborne oil approaching historic lows. US oil exports surged to a record 12.7 million barrels per day, though key Texas pipelines are operating near or above capacity. Upside risks to oil prices persist, primarily stemming from prolonged Hormuz disruptions and ongoing Middle East supply losses.