US Oil Data Is A Lot Better Than It Looks (Part 3)

Please read part 1 and part 2.

With the benefit of hindsight, it was evident that the catalyst for oil prices moving higher was more inventory draws. In particular, the market needed to see visible inventory reduction in the US to believe in the "deficit" narrative. It also helps to have the Saudis and Russians extend their voluntary production cuts into year-end, but as we noted for months now, inventory draws are what's needed to change sentiment, and they are finally here.

US oil data continues to be meaningfully better than what's shown on the surface. US crude storage, in particular, is now at the lowest level for this time of the year in the last 5-years.

Sadly, however, next week's preliminary figures show a build in crude storage. As we noted in our crude storage outlook update yesterday, US crude exports show a sizable drop w-o-w, while crude imports jumped.