Demand Not Inventories Should Drive OPEC+ Decision

World Pipelines: As the OPEC+ meeting, now delayed until July 7, approaches, the question of inventory levels will gain considerable attention. As we have written before, we believe global (OECD and non-OECD) crude oil and product inventories are adequate, but not excessive. This month, however, we parse just the OECD stock picture, which will shape impressions of over or under supply before and during the OPEC+ meeting. Although we are not supporters of the five-year average measurement, that approach (when corrected for demand) shows crude inventories are in the middle of the historical range, and product stocks are actually at the low end of the range. We do not believe inventories will or should be justification for further production restraint. But, we are concerned about weak underlying demand growth as discussed in our Global Oil Balance analysis.