Opec cut key to mar­ket re­bal­anc­ing

> Oil glut will last well into 2017 un­less car­tel ful­fils pledge to re­duce out­put: IEA

The Sun (Malaysia) - - SUNBIZ -

PARIS: A mas­sive oil glut may weigh on world mar­kets deep into next year un­less the Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (Opec) makes good on its promise to cut out­put, the In­ter­na­tional En­ergy Agency (IEA) said yes­ter­day.

The oil price has re­cov­ered steadily since the oil car­tel said last month that it would re­duce pro­duc­tion, with de­tails to be ham­mered out at the car­tel’s Novem­ber meet­ing, and such a deal would “speed up the process” of work­ing off global oil in­ven­to­ries, the IEA said in its monthly re­port.

“Even with ten­ta­tive signs that bulging in­ven­to­ries are start­ing to de­cline, our sup­ply-de­mand out­look sug­gests that the mar­ket – if left to its own devices – may re­main in over­sup­ply through the first half of next year,” the IEA said. “If Opec sticks to its new tar­get, the mar­ket’s re­bal­anc­ing could come faster.”

Ini­tially greeted with scep­ti­cism among an­a­lysts, Opec’s agree­ment to cut out­put has gained trac­tion in the oil mar­ket, with the IEA not­ing that the oil price has risen by 15% since the car­tel’s an­nounce­ment on Sept 28.

How­ever, oil prices fell al­most 2% yes­ter­day, re­treat­ing from one-year highs, af­ter mixed re­sponses by Rus­sian oil in­dus­try of­fi­cials to­wards Opec’s call for all ma­jor crude pro­duc­ers to cut out­put.

Brent was down US$1, or 1.9%, at US$52.14 (RM217.55) a bar­rel by 1541 GMT, off the oneyear high of US$53.73 hit on Mon­day.

US West Texas In­ter­me­di­ate crude slipped 90 cents, or 1.8%, to US$50.45.

Igor Sechin, Rus­sia’s most in­flu­en­tial oil ex­ec­u­tive and the head of Ros­neft, told Reuters in an in­ter­view his com­pany will not cut or freeze oil pro­duc­tion as part of a pos­si­ble agree­ment with Opec. – Agen­cies

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