U.S. Shale Oil Pro­duc­ers Urged To Help Cap Global Sup­ply


NEW DELHI (Reuters) - OPEC’s Sec­re­tary General Mo­hammed Barkindo on Tues­day called on U.S. shale oil pro­duc­ers to help cur­tail global oil sup­ply, warn­ing ex­tra­or­di­nary mea­sures might be needed next year to sus­tain the re­bal­anced mar­ket in the medium to long term.

“We urge our friends, in the shale basins of North Amer­ica to take this shared re­spon­si­bil­ity with all se­ri­ous­ness it de­serves, as one of the key les­sons learnt from the cur­rent unique sup­ply-driven cy­cle,” said Barkindo.

The com­ments by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries of­fi­cial came dur­ing a speech de­liv­ered at the In­dia En­ergy Fo­rum or­ga­nized by CERAWeek in New Delhi.

“At the mo­ment we (OPEC and in­de­pen­dent U.S. pro­duc­ers) both agreed that we have a shared re­spon­si­bil­ity in main­tain­ing sta­bil­ity be­cause they are also not in­su­lated from the im­pact of this down­turn,” Barkindo said, re­fer­ring to a slide in oil prices that spurred OPEC to agree pro­duc­tion cuts late last year.

“The call by in­de­pen­dents them­selves (is) that we need to con­tinue this in­ter­ac­tion,” he said.

While OPEC and some other pro­duc­ers, in­clud­ing Rus­sia have cut sup­plies this year in or­der to prop up prices, U.S. pro­duc­tion has soared by al­most 10 per­cent this year, driven largely by shale drillers. Barkindo said he hoped that new pro­duc­ers, not just U.S. shale drillers, would join pro­duc­tion cuts.

On Monday, Saudi Ara­bia cut crude oil al­lo­ca­tions for Novem­ber by 560,000 bar­rels per day (bpd), in line with the king­dom’s com­mit­ment to the sup­ply re­duc­tion pact.

“De­mand-sup­ply is re­turn­ing to re­bal­ance through mas­sive de­stock­ing that we have been wit­ness­ing of stocks in OECD across re­gions in a very mas­sive way,” Barkindo said later, speak­ing to re­porters on the side­lines of the conference.

“In the past four months alone, we have seen de­stock­ing to the tune of 130 mil­lion bpd,” he said.

The aim of the OPEC-led cut is to trim the level of oil in OECD in­dus­tri­al­ized coun­tries com­pared with the five-year sup­ply av­er­age. Barkindo said the stock over­hang to the five-year av­er­age stood at 171 mil­lion bar­rels in Au­gust, against 338 mil­lion at the start of the year.

“The speed and pace (of de­stock­ing) has ac­cel­er­ated as a re­sult of an­tic­i­pated and projected de­mand growth in the sec­ond half of 2017 to the tune of 2 mil­lion bpd. We are wit­ness­ing a fast re­turn to a bal­anced mar­ket,” Barkindo said.

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