BNP points out that since 2014, oil markets have been laden with surplus supplies with 1 billion bbl added to supply from the first quarter of 2014 through the second quarter of 2016. The International Energy Agency (IEA) said pretty much the same thing in its July report, which pointed out that global inventories of crude and products were at an all-time record and even though crude production was 750,000 b/d below prior-year levels market surpluses were still a factor.

BNP says there is “still much crude oil sloshing around in tanks”  despite lower crude oil production in the U.S. OECD crude stocks by BNP’s count have been running 190,000 b/d over the five-year average while  U.S. stock levels exceed the five-year level by 133,000 b/d.

“The level of OECD crude inventory is far in excess of that seen in the late 1990s when oil prices hovered above $10/bbl,” BNP points out. So far oil markets have been spared the weight of this surplus because the barrels are sitting in storage.

Even though BNP thinks oil surpluses will come into better balance later in 2016, overall the firm thinks market surpluses will remain.

“Our balance does not indicate sufficient draws between now and the end of 2017 to materially reduce what has already accumulated thus far,” BNP tells clients.

BNP characterizes the mounting oil surpluses as nothing short of “relentless” from 2014 until now. Quarterly builds have averaged more than 1 million b/d and hit 2 million b/d at the peak, resulting in record high supplies.

Even a few of the U.S. oil refiners in commenting on supply during second-quarter results acknowledge that supplies by and large have grown faster than demand, even as demand has increased.

What we are now seeing, however, is some U.S. refiners starting to plan possible run cuts to clear up some of the finished product inventory.

PBF, Marathon and BP are among refiners that alluded to possible run cuts because of poor refining margins.