Vienna

Opec expects its efforts to clear the surplus in oil inventories to finally succeed by the end of the third quarter of next year, said people familiar with the group’s internal forecasts.

The Organisation of Petroleum Exporting Countries and allies including Russia have been cutting oil production this year to bring fuel inventories in industrialised nations back in line with the five-year average. They hope to end an unprecedented build-up that sent prices plunging from above $100 a barrel in 2014 to around $50 currently, but the process has taken longer than expected and the deal has already been extended beyond its initial June expiry.

Opec estimated that stockpiles in developed nations were still about 171 million barrels above that average in August, but expected trends in supply and demand will eliminate the surplus in about a year, the people said, asking not to be identified because the information isn’t public. The forecasts assume that Libya and Nigeria’s production will remain at current levels and US shale output will expand by no more than 500,000 barrels a day next year, two of the people said.

Although the current production curbs are due to expire at the end of March, Opec’s estimates suggest producers will have to extend them to achieve their long-stated objective. They would need to maintain output around current levels in order to create a supply deficit next year big enough to erode stockpiles, according to Bloomberg calculations based on data published in the group’s monthly market report.

Opec and its allies will hold a meeting in Vienna on Nov. 30 where they may decide whether to prolong the measures. Russian President Vladimir Putin signalled earlier this month that he’s prepared to keep the accord going until the end of next year.

Opec’s projections align with those of the Energy Information Administration, the statistical arm of the US Department of Energy.

The International Energy Agency estimated in its monthly report on Thursday that the decline in inventories this year will halt in 2018 due to rising supplies from the US and elsewhere. Even if stockpiles remain stable, they could continue to converge with the five-year average, which is steadily rising following years of oversupply.