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(Bloomberg) – The unprecedented glut in oil stocks that built up during the coronavirus pandemic has all but disappeared, supporting a price rally that saves producers but upsets consumers.
Barely a fifth of the surplus that flooded storage tanks in developed economies when demand for oil slumped last year remained in February, according to the International Energy Agency. Since then, the lingering remains have been reduced as supplies amassed at sea plummet and a key depot in South Africa runs out.
The rebalancing comes as OPEC and its allies keep large swathes of production offline and a temporary economic recovery revives global demand for fuel. It supports international crude prices at nearly $ 67 a barrel, a boon for producers but a growing concern for motorists and governments wary of inflation.
“Inventories of commercial oil in OECD countries have already returned to their five-year average,” said Ed Morse, head of commodities research at Citigroup Inc.’s oil reserve. “
The process is not quite finished. Considerable overhang appears to remain off the coast of China’s Shandong Province, although this may have accumulated to power new refineries, according to consultants IHS Markit Ltd.