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Highlights

Commercial oil inventories held by OECD countries fell to 2.855 millionbarrels in February, 44 million barrels above the five-year average, OPECsaid Wednesday.

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That is down from 2.865 million barrels in January, which was 50 millionbarrels above the five-year average, OPEC reported earlier this month.

OPEC and its allies in a production cut agreement have said they areaiming to reduce OECD commercial stocks to the five-year average, thoughthey have been mulling other benchmarks to gauge the success of theircuts.

The five-year average may give a false reading of the market'srebalancing, OPEC ministers have said, given the significant build inbarrels in storage over the last few years, as well as new productioncoming online from the US and expected higher demand.

Officials have said they may adjust the target to include tracking ofinventories by region and consideration of what crude grades are instorage.

Participants in the production cut deal will discuss this at OPEC'supcoming seminar in June, just before the coalition meets on June 23.

"Consumers' opinion of how much inventories they need to hold may havechanged," Saudi energy minister Khalid al-Falih said last month. "We needto make sure that we look at non-OECD inventories, floating storage,investor behavior and numbers from respectable agencies."

The production cut deal calls on OPEC and 10 non-OPEC partners led byRussia to cut a combined 1.8 million b/d in supplies through the end of2018.

The six-country monitoring committee overseeing the deal said Wednesdaythat compliance with the cuts hit 138% in February, a record high.

"Given the success of the Declaration of Cooperation, the [monitoringcommittee] called on participating countries to consider furtheropportunities to institutionalize their collaboration," OPEC said in anews release touting the compliance figure.

The monitoring committee, which meets in mid-April in Saudi Arabia toassess market conditions, is chaired by Falih and includes ministers fromRussia, Kuwait, Venezuela, Algeria and Oman.

--Herman Wang, herman.wang@spglobal.com

--Edited by Jonathan Fox, newsdesk@spglobal.com