As global production changed relative to demand, the world moved from a period of over supply in 1998 to one of under supply in 1999 and 2000. Inventories are a good means of seeing the imbalance between petroleum production and demand. For example, when production exceeds demand, inventories rise. A large oversupply will put downward pressure on prices, while undersupply will cause prices to rise. OECD inventories illustrate the changes in the world balance.
All scenarios shown leave inventories low through the winter.
It would take an increase of 1 million barrels per day of production staring in the fourth quarter to get stocks back to normal levels by March before the start of the high summer gasoline demand period. The base case has stocks very slowly recovering, but not reaching normal by June of 2001. The 0.5 million barrel increase over the base doesn t reach recovery until June, increasing the potential for volatility through the next gasoline season.