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A worldwide oil glut is on the verge of disappearing, according to a joint OPEC and non-OPEC technical panel, according to people familiar with the matter, partially attributed to an OPEC-led supply agreement implemented beginning January 2017.
Earlier on Thursday, the meeting of the Joint Technical Committee discovered that oil stockpiles in developed countries in March came in at 12 million barrels higher than the five-year average, according to one of the sources. The figures are down from 340 million barrels above the average in January 2017.
The stated target of the production cut is to lower the surplus in oil stocks to that of the five-year median, although oil ministeres have stated that other metrics should also be taken into consideration.
While OPEC is closing in on the original target of the pact, there is no sign yet that top exporter Saudi Arabia or its allies want to ease on the supply cut.
Saudi Arabia is aiming to see crude climb to $80 or even $100 per barrel, according to industry sources, an indication that Riyadh will push for changes to the supply-limiting deal despite the original target being within reach.
In January 2017, OPEC along with Russia and other producers started to reduce supply in an attempt to support oil markets and boost prices. They have prolonged the deal until December 2018 and will convene in June to review policy.
Following the technical meeting, a ministerial panel of OPEC and non-OPEC producers called the JMMC will convene in Jeddah on Friday. They are expected to talk about the five-year average inventory metric, despite JTC making no recommendations on the issue.
