OPEC Panel Confirms Oil Glut Elimination

A meeting of the Joint Technical Committee of OPEC and non-OPEC oil producers part of the supply-cut pact announced on Thursday that oil inventories in developed economies had dropped to 12 million barrels over the official target of the cuts—the five-year average, a source familiar with the matter told Reuters.

The technical panel is meeting in Jeddah, Saudi Arabia, ahead of a ministerial meeting on Friday, which will be attended by the energy ministers of Saudi Arabia and Russia, among others.

According to Reuters’ sources, the panel found that oil inventories in the Organization for Economic Cooperation and Development nations were 12 million barrels above the five-year average, a virtually non-existent surplus, especially if compared to the 340-million-barrel overhang that was present in January 2017 when OPEC and its non-OPEC partners led by Russia started to cut oil production to erase the glut and prop up oil prices. Thanks to the cuts and to a better-than-initially expected global oil demand growth last year, OPEC and friends have now managed to virtually bring the oil market back to balance, if the five-year average of OECD oil stocks is the metric to measure the success. Yet, there are no signs that OPEC and non-OPEC partners would discuss exiting the cuts.