OPEC Prepares Draft Report on Oil Output Cut Deal - Russian Energy Ministry

Cornelia Mascio
Marzo 21, 2017

For Saudi Arabia, economists at OPEC reported total crude oil production increased to more than 10 million barrels per day last month, even as the country leads the effort to balance the market. Russian Federation and other non-OPEC producers agreed to cut half as much.

Following the lifting of sanctions imposed against Iran's nuclear program, business has been gradually returning to the country with many large oil companies importing crude oil of Iranian origin.

Traders continue to worry about OPEC's ability to reduce the supply glut and extend the deal for another six months. In a note two days earlier, Currie said "the market needs a little patience" for the effect of Opec's cuts to kick in. "Any extension of the cut agreement should be with non-OPEC".

Josh Stevenson, an analyst who provides market analysis on Lionexo observes that "he fact that there is yet to be a marked "correction" in the supply-demand dynamics of oil made it hard for OPEC's cut to make much of a positive difference in triggering an increase in oil prices".

The group wants stocks in the industrialised world to fall to the average of the past five years.

The rally, following the fall in U.S. crude oil inventory, did not have enough legs to carry oil above $50 a barrel level.

"There's a bit more producer commitment, with the idea of more producers being amicable to the fact that they may need to extend this period of output restraint beyond the initially agreed six-month period", Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone.

"The ministers will meet in May to decide, but everyone has to be on board", an OPEC source from a major producer said. OPEC members are scheduled to meet again on May 25 in Vienna to evaluate it production decline policy.

The Organization of Petroleum Exporting Countries is leading an effort to correct an oversupplied market through managed declines.

Still, OPEC and its partners are "fully committed" to curbing supply, Al-Falih said.

"The American people aren't stupid", he said back in 2012 - when the price of oil was above $100 a barrel and gas was $3.50-plus a gallon at the pump.

The increase in output from US shale oil producers has practically negated the expected effects of OPEC's production cut. Of a truth, OPEC has recorded decent compliance levels in the output cut but an increase in US shale oil production continues to keep the oil supply practically unchanged.

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