Given current consumption patterns, by the end of the year inventories will have fallen to their lowest level since 1974, he said.
The price move came after an industry group reported that domestic inventories of crude oil had fallen to the lowest level since January 1998.
Separately, the government reported that inventories at businesses fell 0.4 percent in June.
In the third quarter, the inventory for single-family homes fell to 2,501, 28 percent below last year's level.
Business sales rose 3.9 percent in December while inventories fell 0.5 percent.
And inventories of both gasoline and crude oil fell 5.6 percent last week.
As a result, for the rest of the year the company will ship fewer cigarettes to let inventories fall back.
The institute also reported that crude inventories had fallen, while the energy administration's report showed a slight increase.
Oil stocks advanced with crude prices after inventories fell unexpectedly.
Putnam County's inventory fell to 830 properties last year, down 23 percent or 1,072 from the year before.
