Citi says so:
Oil markets are persistently misunderstanding this Friday’s meeting of the OPEC JMMC in Vienna, confusing it with an OPEC ministerial meeting and expecting decisions related to whether the producer group plus Russia and other non-OPEC countries will extend and/or deepen their output cuts. Little could be further from reality. The producers will be discussing scenarios to be considered at future meetings, especially given the presence of Saudi Arabia’s oil minister in his capacity as Chair of the OPEC Ministerial Conference. But the Joint Market Monitoring Committee (Kuwait as Chair plus Algeria, Russia, Venezuela and Oman) will be doing what their name says: monitoring compliance. Their task won’t be a surprise since the findings have already been compiled and scoured by the Joint OPEC/Non-OPEC Technical Committee (JTC), which finally was able to see a drop in OPEC output in August due especially to pullbacks in Libya and Iraq.
Petroleum prices have rebounded even in the midst of the most destructive hurricane season in US history and the continued impact of major storms on US demand just barely half way through this year’s hurricane season. The price surge has reflected numerous factors, not least of which has been the steady reduction of both on-land and floating crude and petroleum product inventories, which Citi calculates have fallen by 1.2-m b/d (70-m bbls) since the start of 2Q’17. We expect these declines to continue into 2018, at the end of which inventories should be drawn down from a peak of 42 days of forward demand cover to less than 37 days, a level last breached in 2013 when prices were well above $100/bbl. Even if total inventories rise again next year, they are unlikely to grow in terms of demand cover given the positive state of global GDP growth, especially in emerging markets, where demand growth could be stellar.
