LONDON/DUBAI - OPEC has shifted the goalposts for assessing an overhang in oil inventories, giving the group more room to prolong production cuts, while analysts warn the move will offer a distorted view of market conditions.
Including this new metric would be a shift away from the more recent five-year average of 2014-2018, which the International Energy Agency , and OPEC itself, had used to gauge market conditions. “This is a new perspective suggested by OPEC. We have our own perspective,” IEA chief Fatih Birol told Reuters.
In comparison, the overhang in May above the five-year average of 2014-2018 stood at only 6.7 million barrels, the IEA said. OPEC’s own figures suggest the May glut was at 25 million barrels above the 2014-2018 average.“Examining the 2010-14 five-year average will encourage OPEC+ to maintain supply restraint to rebalance the market, but putting too much focus on a single metric could result in actions that have unintended consequences,” Richard Mallinson, co-founder of Energy Aspects, said.
OPEC and the IEA use OECD inventories to gauge stocks worldwide, which could create another distortion. Mallinson said OECD inventories did not capture the growing importance of stocks held in non-OECD economies, particularly China and India.Even though the latest IEA figures show a modest overhang in inventories over the five-year average, analysts generally believe the market will remain in excess in 2020.
It's the Mind Flayer! StrangerThings
then, Why aren’t oil prices plummets in India
Can't tell it by prices at the gas pump..... Rich people getting richer via monoply prices.
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