The oil market is tipping slowly from glut to equilibrium.
Output cuts from OPEC and 11 non-OPEC countries have begun to reduce crude flows in the oil market.
The market is not quite there yet. Indeed, the grand “re-balancing” of supply and demand has yet to take place. However, the International Energy Agency does at least believe “that the market is already very close to balance.”
What’s more worrying, and where the IEA’s number-crunchers differ sharply with their OPEC counterparts, is what happens next? Re-balancing is one thing, but the OPEC output cut was also meant to usher in a period when demand would start running ahead of supply. At that time inventories would be reduced.
It’s here where there’s a hell of a discordance between the two groups, and even within the IEA’s own figures.
OPEC, which published its own monthly report a day before the IEA, paints a much less optimistic picture. It shows global oil inventories increasing by 430,000 barrels a day in the quarter just ended. No confusion there. The world is still over-supplied with oil, according to its biggest producer nations.