Global oil inventories have fallen to below their five-year averages according to un-named sources connected to the Organisation of the Petroleum Exporting Countries (OPEC) and cited by Bloomberg.
A meeting last week of OPEC’s Joint Technical Committee in Jeddah concluded that, after analysing data, inventories now sit around 20mn barrels below five-year averages, and wiping out any excess was the goal of the output cuts instigated by Saudi Arabia, Russia and other OPEC members and non-OPEC countries when they commenced well over a year ago.
The committee concluded that the cartel’s output scale back had seen 360mn barrels of crude oil disappear from global stockpiles since the start of 2017. The reason for the major reduction in reserves was due to the stringent adherence to the cuts over time which, according to Bloomberg, reached 152% of compliance in April.
Meanwhile, oil prices have suffered as a consequence with the price of light, sweet West Texas Crude dipping below $70 a barrel and Brent crude losing around $4 in the past five days and now sitting just above $75 a barrel.
Prices will come under more pressure as leading OPEC producer Saudi Arabia and Russia are now seriously considering reducing the output cuts, and raising production, as Venezuela’s economic woes continue and the sanctions recently re-imposed on Iran will start to bite later this year.