OPEC+ prepares to maintain supply reductions amid increasing global oil inventories
Date
5/30/2024 5:23:11 AM
(MENAFN) Delegates and analysts within the OPEC+ alliance anticipate that the surge in global oil inventories through April, driven by subdued demand for fuel, will reinforce the rationale for member nations to uphold supply cuts at the upcoming June 2 meeting. According to insights, OPEC+—comprising OPEC nations and allies like Russia—will convene to deliberate on supply policy and the potential extension of voluntary production cuts.
Sources within OPEC+ had previously hinted at the likelihood of retaining production cuts, reflecting the group's commitment to stabilizing oil markets amidst fluctuating demand dynamics. Oil stocks in major consumer nations serve as a pivotal metric in the oil sector, alongside other indicators such as the robustness of crude oil markets. Preliminary data from OPEC's May oil market report revealed that oil inventories in OECD countries reached 2.79 billion barrels in March, marking a monthly increase of 20 million barrels and an annual rise of approximately 34 million barrels despite ongoing OPEC+ production cuts.
Meanwhile, the International Energy Agency's May report highlighted a significant uptick in total global inventories in March, registering an increase of 34.6 million barrels compared to February. This surge was primarily driven by a notable expansion in floating oil inventories. Moreover, there are indications suggesting a further rise in inventories in April, attributed to the unloading of crude oil and fuel from tankers and a decline in exports from key regions such as Russia, North America, and South America.
A second OPEC+ delegate echoed sentiments of market oversupply amid slowing demand, underscoring the prevailing challenges facing the oil industry. The International Energy Agency's observations revealed a divergence between OECD and non-OECD inventory trends, with the latter witnessing its first increase in March since November. Notably, while OECD countries continue to grapple with elevated inventories, the inventory levels of OPEC member nations stand at their lowest levels in two decades, highlighting the contrast in supply dynamics between OPEC and non-OPEC regions.
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