The International Energy Agency (IEA) in its latest Oil Market Report says that OPEC may well have achieved its aim of reducing global oil stocks to a desired level.
As the IEA put it: "It is not for us to declare on behalf of the Vienna agreement countries that it is “mission accomplished”, but if our outlook is accurate, it certainly looks very much like it."
In its latest OMR, the IEA said its balances show that if OPEC production were constant this year, and if our outlooks for non-OPEC production and oil demand remain unchanged, in 2Q18-4Q18 global stocks could draw by about 0.6 mb/d."
The IEA says its overall view of global demand and supply growth in 2018 is unchanged from last month. For demand, early in 2018 stronger growth in the US was partially offset by weaker growth in China. India has seen a strong start to the year. Globally, we expect oil demand to grow by 1.5 mb/d in 2018.
On the OPEC cuts, the IEA says the overall state of the cuts in March shows OPEC’s compliance rate at 163 per cent with its non-OPEC partners achieving a rate of 90 per cent. With just under half of global oil supply subject to restraint and oil demand growing steadily, the impact on stocks has been substantial.
The IEA said stocks in developed countries could fall to their five-year average, a metric used by OPEC to measure the success of output cut, as early as May.
"Since May last year stocks have fallen constantly the average and new data for February show a larger than usual fall in volume terms with stocks now only 30 mb above the five-year level, and product stocks actually below it."