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The latest figures from the IEA and Opec show a market increasingly moving towards balance, albeit slowly. Whilst Opec has cut by more than most observers expected this has been part-balanced by a rapid ramp-up in US output. Even if Opec producers maintain current cuts then rebalancing – defined as a 270mn barrel stockdraw – will be achieved no earlier than the fourth quarter.
Although Opec countries have made sizeable cuts since January, they have yet to offset the excesses caused by their ramp-up of output to a series of record highs in late-2016. Small wonder that US commercial crude inventories hit a new all-time high of 528.4mn barrels on 3 March, before edging lower to 528.1mn barrels this week. This brought an end to a run of nine consecutive weekly builds caused by buoyant shale production as well as imports.
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