Oil stockpiles are falling in some locations due to OPEC leader Saudi Arabia’s production cuts, supporting prices that are forecast to rise.

JP Morgan analysts predict that oil inventories now determine oil prices more than the U.S. dollar.

The International Energy Agency (IEA) and OPEC estimate oil demand to outstrip supply this year, resulting in inventory draws of 400,000 to 500,000 barrels per day (bpd), largely in the second half of the year.

The IEA said that global oil stocks rose to their highest level since September 2021 in May, led by non-OECD countries.

However, analysts think tightness is emerging, particularly in the US. OPEC and its allies’ curbs have tightened the supply of sour crude, which is cheaper than sweet crude,

but fuel has declined faster than crude.

The bank attributed the inventory decline to refineries working harder to fulfill summer demand as people drive and fly more, and Russian oil exports falling this month.

The bank predicts benchmark Brent prices to rise to $86 by the end of the third quarter before dropping in the fourth quarter as stocks expand again.