An inverted US Treasury bond yield curve. China’s industrial growth at a 17-year low. Negative German GDP growth.

These headlines have roused fears the global economy is slipping into recession.

In early December 2018, the Alberta provincial government took a dramatic step to address the oversupply of oil that was causing the collapse in Canadian crude prices.

Local oil companies were told how much they could produce, starting January 1, making Calgary feel more like an OPEC capital than a freewheeling oil town.

Eight months later, those efforts are bearing fruit.

A decline in US crude inventories has narrowed the price discount of the US crude benchmark (WTI) versus the global crude benchmark (Brent) to its lowest level in more than a year.

Increasing volumes of US crude leaving from Gulf Coast ports to refineries abroad have drained inventories in Texas and Louisiana, and pulled barrels via pipeline from the Cushing, Oklahoma storage hub.

This trend should continue.

The talk in the oil market the last few months has centered on two main stories: concerns over global economic growth and conflict in the Strait of Hormuz.

The first story suggests less oil demand (bearish), while the second story implies less oil supply (bullish). Taken together, this narrative has kept oil prices in a tight range.

In early July, Saudi Arabia’s energy minister Khalid al-Falih said that output cuts by OPEC and other major producers needed to be kept in place to lower crude inventories.

That wasn’t the first time al-Falih has mentioned crude inventories as the preferred metric for determining OPEC production policy.

What surprised many people was the time period he selected.

Record-high US crude oil exports last month caused a sharp drawdown in crude storage at the only port capable of loading and off-loading supertankers.

Crude inventories at the Louisiana Offshore Oil Port (LOOP) plummeted in June, falling from 83% of capacity the week of May 30 to 36% of capacity the week of July 11, according to Ursa measurements.

The demand for barrels outpaced the supply arriving at the complex, pulling barrels out of storage.

We've spent some time recently digging into our global crude inventory data and have found interesting correlations with a range of tradeable instruments.

In a previous whitepaper, we focused on ICE Brent futures, NYMEX WTI, single-name equities (i.e. ExxonMobil) exchange-traded funds and exchange-traded notes.

China has imported record amounts of crude oil so far in 2019. Can this frenzied pace continue into the second half of the year?

To answer this question, it helps to know the reason behind the surge.

Were the extra barrels needed to satisfy unusually strong refinery demand? A desire to stockpile supply for later consumption? Or perhaps add more cushion to strategic reserves?

The fire that engulfed a Philadelphia refinery on June 21 caused such extensive damage the owner decided to permanently close the financially-struggling facility.

It isn’t unusual for refineries to experience natural & man-made disasters. When these events strike, people are eager for information on the extent of destruction which can sometimes be difficult to obtain.