Oil Prices Poised to Surge as Global Stockpiles Dwindle

Oil inventories in the world's largest economies are on track to fall to their lowest levels since at least 2003 as supplies decline at a record pace, according to the US Energy Information Administration (EIA).

Total oil inventories in member states of the Organisation for Economic Co-operation and Development (OECD) are expected to fall to just under 2.3 billion barrels by December. The forecast is based on the EIA's assumption that maritime traffic through the Strait of Hormuz will not return to pre-conflict levels until early 2027.

OECD stockpiles have not been this low since the EIA began keeping records in 2003, the agency said in its monthly Short-Term Energy Outlook.

The rapid drawdown in inventories, which the EIA says is needed to offset the loss of around 11 million barrels per day of Middle Eastern oil production, is expected to put upward pressure on prices in the coming months.

Global benchmark Brent crude is forecast to average about $105 a barrel in June and July, significantly above the $91.60 per barrel implied by futures markets on Tuesday, according to the EIA.

(reuters, mja)