# Oil, Liquidity, and Inventory Research Note

The v0.1 model asks a narrow question: does broad global liquidity lead oil-price momentum, and does comparative inventory improve that signal?

The answer is two-layered. Global M2 provides the strongest leading signal for oil-price momentum. In rolling validation, the most stable lead-time range is about 5 to 6 months, and the final reporting model is locked as GM2-only at a 5-month lag.

Comparative inventory acts as a residual, state, and regime diagnostic. It does not improve the primary Oil YoY forecast enough to justify using it as a direct forecasting feature. Instead, it helps explain whether oil is rich or cheap versus the liquidity-implied path.

The current signal is clear but not mechanically bullish or bearish. As of the latest complete month, current WTI is materially richer than the lagged GM2-implied path, while comparative inventory is near normal. That means liquidity alone would imply less WTI YoY strength than the market is showing, and inventory is not currently giving a strong surplus or deficit explanation for that residual.

The practical interpretation is:

- Liquidity describes the impulse.
- Inventory describes the physical-market state.
- Regimes describe when the relationship can bend or break.

This model should be used as a research frame for monthly macro/commodity interpretation. It should not be used as a short-term trading signal or as a replacement for physical oil-market analysis.