Murky oil inventory picture leaves market grappling for clarity


* Oil supplies remain plentiful despite OPEC-led cut
    * Measuring stored oil globally is notoriously difficult
    * But there are signs supplies are being sold out of storage
    * Oil supplies and crude price curve:

    By Henning Gloystein and Libby GeorgeSINGAPORE/LONDON, April 21 (Reuters) - The jury is still out
over whether an OPEC-led production cut aimed at tightening oil
markets is working, or if the producer club has simply enabled
higher prices without making much of a dent in the global fuel
supply overhang.
    Analysts say there are early indications that at least some
inventories, key in gauging the health of the market, are
starting to draw down.
    However, inventory levels are hard to judge outside of the
United States, as many countries do not release specific
figures. Oil shipments show an ongoing excess, while price
activity in oil futures suggests sagging optimism the imbalance
is being corrected.
    Over two years into a 50 percent price slump <LCOc1>, the
Organization of the Petroleum Exporting Countries (OPEC) and
some other producers, including Russia, pledged to cut
production by almost 1.8 million barrels per day (bpd) during
the first half of the year.
    But more oil than ever is currently traversing the world's
oceans. Thomson Reuters Eikon data shows global crude shipments,
which monitor tanker movements but exclude pipeline flows, hit a
record 47.8 million bpd in April, up 5.8 percent since December,
before cuts were implemented.
    This is in part due to a jump in production and exports from
producers who did not agree to cuts, especially the United
States. [nL3N1GU1GS]
    "OPEC seems more like a magician who is keeping the
audience's attention fixed firmly on his hands (its production
policy) while the actual trick takes place elsewhere (non-OPEC
supply)," said Carsten Fritsch, oil analyst with Commerzbank.
    U.S. production is soaring, jumping by almost 10 percent
since mid-2016 to 9.25 million bpd <C-OUT-T-EIA>. This brings
its output close to the world's top two producers, Saudi Arabia
and Russia. [nL1N1HP13K]
    Futures prices suggest skepticism the market is rebalancing.
Early this year the forward curve for Brent crude futures
<0#LCO:> moved from contango, in which future prices are more
expensive than those for immediate delivery, to flat or even
briefly into backwardation, suggesting a balancing in prompt
markets. This has since reversed sharply. [nL8N1HS3BL]
    "If they're (OPEC) so busy complying, how come we're taking
so much extra inventory? Why is the whole curve in free-fall
when supplies are supposedly tightening?" said Robert Yawger,
energy futures strategist at Mizuho Americas.

    To fully determine the state of oversupply, looking at
storage levels is key, but it is not easy. U.S. inventories
remain bloated <C-STK-T-EIA>, but outside the United States, it
is notoriously difficult to reliably count stored barrels.
    There are some signs these harder-to-track inventories are
easing. The International Energy Agency (IEA) said crude in
less-visible places, such as barrels outside the developed world
and those in floating storage, decreased in the first quarter.
    But IEA data on the 35 Organisation for Economic Cooperation
and Development (OECD) countries paints a more bearish picture.
OECD stocks fell by 17.2 million barrels in March, but since the
OPEC-led cut started at the beginning of the year, inventories
are up by 38.5 million barrels. [nL8N1HL1EO]
    "If stocks are still rising strongly, you've still got an
oversupplied situation," said Jamie Webster, a fellow at
Columbia University's Center on Global Energy Policy.
    "It doesn't make sense for OPEC to pat itself on the back
for strong compliance. That's what they agreed to, not what the
impact is."
    Some of the oil sloshing around the world could also have
been taken out of OPEC's own storage to meet customer demand
despite cuts. Saudi Arabian Energy Minister Khalid al-Falih said
on Thursday in an interview with the Saudi-owned al-Hayat
newspaper that supplies remained elevated in part because
traders were selling oil out of tanker storage. [nL8N1HS0T2]
    Russia has also been boosting oil exports, despite cuts
under the deal. [nL5N1FV2HA]
    Millions of barrels of Nigerian oil stored in South Africa'sSaldanha Bay have been sold in recent weeks, and more are
scheduled to leave in May. [nL8N1HF516]
    In Asia, the world's fastest growing consumption region,
many countries, especially China, treat inventory data as
strategically sensitive. But trade flows around Singapore, a key
way station for virtually all tankers from Europe and the Middle
East to Southeast Asia, are a bellwether.
    There has been a noticeable drop in crude storage around
Singapore this year, although some cautioned these barrels will
be quickly replaced by incoming cargoes from the United States
and Latin America. [nL3N1HR25P]

GRAPHIC-Crude oil forward curves & global oil shipments
 (Reporting by Henning Gloystein in Singapore, Gary McWilliams
and Ernest Scheyder in Houston, Libby George in London and Olga
Yagova in Moscow; Writing by Henning Gloystein; Editing by David
Gaffen and Chris Reese)
 ((; +65 6870 3263; Reuters


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