But that drop left forward prices sufficiently above spot prices to create an above-normal rate of return for oil bought for inventory and hedged, even after storage and interest costs are accounted for. As I indicated in early April, this emerging condition could encourage the buildup of enough of an inventory buffer to damp the price frenzy.
Indeed, since early April, private crude oil inventories in the United States have been accumulated at a seasonally adjusted rate of around 250,000 barrels a day, rising as of last week to the highest seasonally adjusted level in three years. A somewhat lesser, but still important, accumulation of crude oil is evident in other major countries.