For two consecutive years oil production growth has not had to meet demand growth in its entirety. From the first quarter of 2017 to the first quarter of 2018 the market was able to pull about 590,000 barrels from drawing down on Organisation for Economic Co-operation and Development (OECD) inventories to meet a large portion of the 1.7-million barrels a day demand increase over the period. In 2018, the mantle was handed to Saudi Arabia to pull in supply from spare capacity — oil that should really only be tapped during times of extreme tightness. It is not a source of supply that is sustainable. This reduction in spare capacity was a large contributor to oil moving above $80 a barrel, but was ultimately a significant portion of the volume that drove the oversupply in the market. However, the extent of the inventory overbuild this time is not a patch on what the market experienced in 2016 — the 2019 first-quarter peak in inventories is likely to be below 1% (about 20-million barrels...

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