At a series of industry events last week in Abu Dhabi, UAE Energy Minister and Opec President Suhail al-Mazrouei stuck to a clear narrative: Opec is not going to change course due to recent price gains that have propelled Brent towards $70/B. Short term price trends are not indicative of market fundamentals, and Opec’s target remains the return of OECD oil inventories to their five-year average.
“There are more than 100mn barrels to be removed if we believe that the five-year average is a good point for us to have as a reference,” Mr Mazrouei says. This week’s monthly reports from Opec (MOMR) and the IEA (OMR) state that inventories remained 133mn barrels and 90mn above the five-year average in November respectively. But observers are increasingly questioning whether the five-year average is a good reference. In particular, strong demand growth in recent years, from developing Asia in particular, means a return to the average may actually leave inventories too low. (CONTINUED - 903 WORDS)
