OPEC Likely to Ex­tend Sup­ply Cuts to Re­bal­ance Mar­ket

Raises fore­cast for 2018 de­mand

THISDAY - - PAGE SIX - Ejio­for Alike with agency re­port

United Arab Emi­rates’ min­is­ter for en­ergy Suhail al-Mazroui has stated that he ex­pects the Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries (OPEC) and non-OPEC coun­tries to ex­tend global sup­ply cuts at the Novem­ber 30, 2017 meet­ing.

This is com­ing as OPEC in its Novem­ber oil mar­ket re­port re­leased yes­ter­day, in­creased the fore­cast for 2018 de­mand for its crude by 360,000 bar­rels per day, from last month’s re­port to 33.42 mil­lion bpd.

But the ten­sions in the Mid­dle East have raised the prospect of dis­rup­tions of crude oil sup­ply, though the price of Brent was steady yes­ter­day at $63 per bar­rel, close to its two-year high.

Speak­ing yes­ter­day at the Abu Dhabi In­ter­na­tional Petroleum Ex­hi­bi­tion Con­fer­ence (ADIPEC), alMazroui said his pre­dic­tion was that OPEC would con­tinue to do what it would take to re­bal­ance the mar­ket.

He added that while he had not heard any OPEC mem­bers dis­cussing the pos­si­bil­ity of not ex­tend­ing the deal, the time and du­ra­tion of an ex­ten­sion was still to be de­cided.

OPEC mem­bers were re­port­edly form­ing a con­sen­sus around ex­tend­ing by nine months their pro­duc­tion cuts deal with other crude ex­porters.

An ex­ten­sion would pro­long the agree­ment among OPEC, Rus­sia and other oil-pro­duc­ing na­tions to keep 1.8 mil­lion bar­rels a day off the mar­ket through the whole of next year.

The ex­porters reached the deal last De­cem­ber and had al­ready ex­tended the agree­ment once through March 2018.

Reuters re­ported last month, cit­ing OPEC sources, that pro­duc­ers were lean­ing to­wards pro­long­ing the agree­ment un­til the end of 2018, though the de­ci­sion could be post­poned un­til early next year de­pend­ing on the mar­ket.

UAE’s en­ergy min­is­ter said he saw no need for the de­ci­sion to be de­layed be­yond the Novem­ber 30 meet­ing in Vi­enna.

His Omani coun­ter­part also voiced con­fi­dence there would be an agree­ment this month.

“I don’t see the need to de­lay the de­ci­sion un­til March... We are not go­ing to meet in that quar­ter un­less it is ex­tra­or­di­nary,” Mazroui said at an en­ergy in­dus­try con­fer­ence.

If there is a de­ci­sion to ex­tend the sup­ply cut it will be un­til the end of 2018, said the Omani oil min­is­ter, Mo­hammed bin Ha­mad alRumhi, adding that he did not think pro­duc­ers would agree to deepen the curbs.

Mazroui, whose coun­try next year holds the ro­tat­ing OPEC pres­i­dency, said that while the UAE backed an ex­ten­sion, he could not say yet whether it would sup­port main­tain­ing the sup­ply cut un­til the end of 2018.

In a re­lated de­vel­op­ment, OPEC yes­ter­day in­creased the fore­cast for 2018 de­mand for its crude by 360,000 bpd, from last month’s re­port to 33.42 mil­lion bpd.

It also said in­dus­tri­alised coun­tries’ Septem­ber com­mer­cial oil in­ven­to­ries, a key marker OPEC uses to mea­sure mar­ket bal­ance, fell by 23.6 mil­lion bar­rels to 2.985 bil­lion bar­rels.

Stocks were 154 mil­lion bar­rels above the five-year av­er­age, the ex­cess that OPEC aims to elim­i­nate.

OPEC Sec­re­tary-Gen­eral Mo­ham­mad Barkindo, speak­ing at the same event, said par­tic­i­pants in the deal were com­mit­ted to achiev­ing mar­ket sta­bil­ity.

How­ever, the Brent oil price was steady at close to two-year high yes­ter­day, with sup­port from Mid­dle East ten­sions and record long bets by fund man­agers bal­anced by ris­ing U.S. pro­duc­tion.

Bench­mark Brent crude fu­tures traded at $63.47 a bar­rel, up 14 per cent so far this month, while the U.S. West Texas In­ter­me­di­ate (WTI) crude fu­tures rose to $56.68 per bar­rel.

Ten­sions in the Mid­dle East have raised the prospect of dis­rup­tions, but it was un­clear whether a strong earth­quake that hit Iran and Iraq on Sun­day had af­fected the re­gion’s oil pro­duc­tion.

Bahrain said at the week­end that an ex­plo­sion that caused a fire at its main oil pipeline on Fri­day was caused by sab­o­tage, link­ing the at­tack to Iran, which de­nied any role.

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