![]() ![]() And it is arguably these other countries that really matter. OPEC’s real problem is not whether to measure in days or in barrels, but whether it can ever adequately count inventories outside the developed countries of the OECD. Fixing on a period of “normal” inventory levels to target, or measuring in terms of days of cover, won’t solve that problem. But a less-widely reported comment by Khalid Al-Falih suggests that the target may shift away from just focusing on inventory levels.įinding reliable data for inventories remains a challenge, Al-Falih told reporters in Riyadh on Feb. The choice of the period over which to average “normal” inventory levels will also have a big impact on determining when the target has been reached.Ĭomments made by oil ministers of Saudi Arabia and Russia last week suggest that the group and friends will land on a clarification of their oil inventory goal. Inventories can be measured in many different ways: the simple volume of oil in storage, the number of days of demand that volume could meet, or, like the International Energy Agency’s emergency stock-holding obligations, the number of days of imports they could cover. My Bloomberg News colleague Grant Smith has written a very clear explanation of how they might shift the inventory goalposts. The trouble is, that some of the tweaks they might look at could end up indicating they have already overshot their target. The Joint Ministerial Monitoring Committee set up to oversee the OPEC+ output deal will discuss the inventory target when it meets in Saudi Arabia in April. And at this point, it’s no longer possible to maintain the charade. That seems a very clear and precise target, but, as I wrote last month, it isn’t. ![]() Since November 2016, OPEC has been able to get away with the idea of trying to return oil inventories to a five-year average level. If inventories are back where they say they want them, but prices haven’t recovered as much as they would like, they need to find a way to justify prolonging the cuts to boost their revenues. And that creates problems for the producer group. stockpiles are close to their lowest in almost three years.īut now their goal is within sight, or it may already have been passed. Figleaf facebook full#Tankers floating full of crude off the coasts of Iran and South Africa have disappeared and total U.S. There is no doubt that the output cuts made by OPEC and its friends, aided by a collapse in production from group member and historic quota cheat Venezuela, have drained a lot of excess oil out of the supply chain. ![]()
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