Hot money’s pushing oil to $70

london — Brent crude touched $70 a barrel on Thursday, a level it last saw three years ago. That might start to look like a level where Opec could say that its work to rebalance the market is done.

After all, its output deal has done a pretty good job of draining surplus inventories. And US oil stockpiles, including crude, refined products and the oil stored in the Strategic Petroleum Reserve, have fallen by around 147 million barrels in the past 12 months and now stand just 23 million barrels above their five-year average, according to weekly government data. But there is more to the run-up in oil prices than the drop in American stockpiles. And Opec should should think very carefully before changing its strategy. Inventory levels outside the US are far more opaque. While the US provides comprehensive data weekly, the Paris-based International Energy Agency only assesses Oecd stockpiles with a 2-month time lag -- so the latest results are for the end of October. They also show excess stockpiles coming down since the middle of 2017. But they also show the rising five-year average, the baseline for measuring excess crude, is having a much bigger impact on the amount of excess crude in storage than is the case in the US That suggests inventories are still too high. That is true whether you look at the absolute volumes of stockpiles, or the number of days of demand that they cover.

If you move beyond the developed countries of the Oecd, the picture is even less clear. So, while US oil stockpiles may be approaching their five-year average level, the IEA data suggest the same is not yet true elsewhere.

This is not the only factor that Opec and friends need to consider. By choosing once again to act as the world’s swing supplier, seeking to balance the volume of oil available against the amount needed by consumers, they have thrown other producers a lifeline.

You need look no further than the EIA’s US production figures. US output has soared on the back of rising prices and will continue to rise. The monthly assessment for October was more than 400,000 barrels a day above the level derived from weekly data.