Traders have been focused on domestic inventory oil storage levels that have been drawn down over the past few weeks. Continued drawdowns support higher prices. In their view, the inventory drawdown of the past few weeks reflects the early stage lag effect of production pressure as a consequence of declining drilling activity dating to last fall. Nonetheless, up to now, advancing technology is enabling U.S. oil production to remain at a record pace despite the declining well count. Traders are likely to be taken by surprise when inventory levels begin to rise within the next few weeks and push prices lower. In our judgment, any sell off in WTI crude due to a rise in inventory storage levels will prove temporary as the surge in imports subsides just as quickly. Oil-related stocks can be expected to decline in sympathy. As investor sentiment washes out, we would use such a pullback as a buying opportunity to establish positions in global oil producers (especially oversold domestic drillers) in anticipation of an earnings recovery (and subsequent increased merger & acquisition activity) on higher oil prices.