Kuwait sees oil in­ven­to­ries fall­ing faster as OPEC keeps cut­ting out­put

Muscat Daily - - BUSINESS -

Is­tan­bul, Tur­key - Crude oil in­ven­to­ries will de­cline at a faster pace world­wide in the sec­ond half of the year as de­mand in­creases and OPEC mem­bers com­ply bet­ter with a global agree­ment to cut out­put, Kuwait’s OPEC gover­nor Haitham al Ghais said.

The Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries and other ma­jor pro­duc­ers in­clud­ing Rus­sia agreed in May to ex­tend their sup­ply-cuts deal through March 2018 be­cause stock­piles hadn’t fallen to their five year his­tor­i­cal av­er­age - the goal of the agree­ment. Yet for the past two weeks, US crude in­ven­to­ries have de­clined, ex­ceed­ing an­a­lyst ex­pec­ta­tions.

“I see this trend con­tin­u­ing with more con­form­ity from OPEC and non-OPEC pro­duc­ers, cou­pled with a fur­ther growth in de­mand,” said Ghais, who was ap­pointed Kuwait’s OPEC gover­nor last month. It would be ‘il­log­i­cal’ for OPEC to change strat­egy now, he said in a phone in­ter­view in Is­tan­bul. Kuwait leads the com­mit­tee mon­i­tor­ing the out- put curbs.

OPEC’s com­pli­ance with the sup­ply cut­backs fell in June to the low­est level since the deal started in January, the In­ter­na­tional En­ergy Agency said on Thurs­day. Bench­mark Brent crude prices have slumped this year amid concerns that in­creased sup­ply from Libya, Nige­ria and the US is negat­ing the im­pact of OPEC’s cuts.

Concerns that sup­plies will keep climb­ing in Libya and Nige­ria, both ex­empt from the cuts deal, are ‘not jus­ti­fied’ be­cause their pro­duc­tion is fluc­tu­at­ing within a range of 300,000 to 500,000 bar­rels a day on aver- age, Ghais said. “We need to see if th­ese in­creases will be sus­tained and sta­ble,” he said.

Libya and Nige­ria were in­vited to send rep­re­sen­ta­tives to the next meeting of the OPEC and non-OPEC Joint Tech­ni­cal Com­mit­tee in Rus­sia later this month to discuss their pro­duc­tion, ac­cord­ing to Ghais, who chairs the com­mit­tee.

The sup­ply-cuts deal is ‘work­ing well’, and there is no need to take fur­ther ac­tion at this time, Ghais said. OPEC needs to ‘fo­cus on its longer-term goal to lower oil stocks and bal­ance the mar­ket’, he said.

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