End of Oil Glut Seen Nigh as World's Use Set to Top Production

While oil demand may pick up in summer, the slowdown in U.S. drilling isn’t big enough to lower production and excessive supply will continue to prolong the surplus, according to Goldman Sachs Group Inc. The market will remain “well oversupplied” through 2016, the bank forecast in a May 22 report, also citing sharp growth in output from low-cost suppliers.

U.S. crude inventories decreased to 482.2 million barrels through May 15, the Energy Information Administration reported last week. Supplies are still near the highest level since 1930, based on monthly records from the Energy Department’s statistical arm dating back to 1920.

OPEC Meeting

U.S. crude supplies increased by 1.3 million barrels through May 22, the industry-funded American Petroleum Institute was said to have reported Wednesday. Government data Thursday is forecast to show inventories decreased by 2 million barrels, according to a Bloomberg survey.

OPEC will keep its daily production target of 30 million barrels a day at its June 5 meeting in Vienna, according to all but one of 34 analysts and traders surveyed by Bloomberg.

The Saudi Arabian-led decision to maintain output at OPEC’s last gathering in November accelerated the collapse in oil as the group favored market share over prices in a bid to drive out high-cost producers.

With oil companies around the world cutting investment, U.S. output peaking and prices rebounding, the strategy will be extended next week, say Societe Generale SA and Bank of America Corp.

--With assistance from Claudia Carpenter in Dubai and Ben Sharples in Melbourne.

To contact the reporter on this story: Aaron Clark in Tokyo at aclark27@bloomberg.net To contact the editors responsible for this story: Yee Kai Pin at kyee13@bloomberg.net Alexander Kwiatkowski, Glenys Sim