Opec hopes for Q3 clearance

LONDON: The Organisation of Petroleum Exporting Countries (Opec) expects its efforts to clear the surplus in oil inventories to finally succeed by the end of the third quarter next year, said people familiar with the group’s internal forecasts.

Opec and allies, including Russia, have been cutting oil production this year to bring fuel inventories in industrialised nations back in line with the fiveyear average.

They hope to end an unprecedented build-up that sent prices plunging from above US$100 (RM422) a barrel in 2014 to around $50 currently, but the process had taken longer than expected and the deal had 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 would eliminate the surplus in about a year, said the people. The forecasts assumed that Libya and Nigeria’s production would remain at current levels and United States shale output would expand by no more than 500,000 barrels a day next year, said two of the people.

Although the current production curbs were due to expire at the end of March, Opec’s estimates suggested producers would 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 November 30 where they may decide whether to prolong the measures. Bloomberg