OPEC sees crude oil market rebalancing at slower pace
Output jumps in May, above 2017 demand for its crude
LONDON, June 13, (RTRS): OPEC said on Tuesday a long-awaited rebalancing of the oil market was under way at a “slower pace” and reported that its own output in May jumped due to gains in nations exempt from a pact to reduce supply.
In a monthly report, the Organization of the Petroleum Exporting Countries said its output rose by 336,000 barrels per day (bpd) in May to 32.14 million bpd led by a rebound in Nigeria and Libya, which were exempted from supply cuts because unrest had curbed their output.
The boost means OPEC is pumping more than its forecast of average global demand for its crude this year, hindering efforts to reduce a glut. But Libyan and Nigerian output remains volatile, meaning the gain may not last.
OPEC said oil inventories in industrialised countries dropped in April and would fall further in the rest of the year, but a recovery in US production was slowing efforts to get rid of excess supply.
“The rebalancing of the market is under way, but at a slower pace, given the changes in fundamentals since December, especially the shift in US supply from an expected contraction to positive growth,” OPEC said in the report.
Oil prices gave up gains on Tuesday
after the release of the report to trade towards $48 a barrel, below the $60 level that top OPEC producer Saudi Arabia would like to see and less than half the level of mid-2014.
Under the deal to support the market, OPEC is curbing output by about 1.2 million bpd while Russia and other non-OPEC producers are cutting half as much. With the glut slow to shift,
producers agreed in May to prolong the accord until March 2018.
In the report, OPEC pointed to continued high compliance by its members with the supply deal and said oil stocks in industrialised nations fell in April — although they are still 251 million barrels above the five-year average.
Supply from 11 OPEC members with production targets under the accord
— all except Libya and Nigeria — averaged 29.729 million bpd last month, according to figures from secondary sources that OPEC uses to monitor output.
That means OPEC has again complied more than 100 percent with the plan, according to a Reuters calculation. OPEC did not publish a compliance number.