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Inventories act as the balancing point between supply and demand. During periods when production exceeds consumption, crude oil and petroleum products can be stored for expected future use. In the economic downturn of late 2008 and early 2009, for example, the unexpected drop in world demand led to record crude oil inventories in the United States and other OECD countries. In contrast, when consumption outstrips current production, supplies can be supplemented by draws on inventories to satisfy the needs of consumers. Given the uncertainty of supply and demand, petroleum inventories are often seen as a precautionary measure.

Source: US Energy Information Administration

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