In early July, Saudi Arabia’s energy minister Khalid al-Falih said that output cuts by OPEC and other major producers needed to be kept in place to lower crude inventories. That wasn’t the first time al-Falih has mentioned crude inventories as the preferred metric for determining OPEC production policy.
What surprised many people was the time period he selected. Al-Falih argued against using the last five years (2014-18), which includes huge inventory builds resulting from the US shale boom. Instead, the OPEC+ coalition should cap output until crude inventories fall back to the average level from 2010-14, he said.
This write-up has some interesting takeaways from YTD movements in global crude oil inventories, such as:
Chinese crude inventories have increased substantially, though not by as much as the surge in imports.
Stocks have been rising in Northwest Europe & the Mediterranean
The US Gulf Coast and Caribbean have seen inventories decline, though for different reasons