Opec gets closer to original target of oil cut pact

london — Opec is closing in on its goal of reducing oil inventories held by industrialised nations to their five-year average, the original target of a supply-cutting pact with Russia and others, figures from the group’s head of research showed on Tuesday.

Oil stocks in developed OECD economies, which were 340 million barrels above the five-year average in January 2017, were just 74 million barrels above that level last month, Ayed Al

Opec’s compliance in January was 133 per cent, meaning they were cutting more than pledged Ayed Al Qahtani, Head of research, Opec

Qahtani, Opec’s head of research, told a conference.

The Organisation of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day as part of its deal with Russia and other non-Opec producers. The pact began in January 2017 and will run until the end of 2018.

A strong level of adherence by producers to their pledged cuts helped to erode the surplus. Opec said their compliance in January was 133 per cent, meaning they were cutting more than pledged and a figure which Al Qahtani said was a record high.

“This conformity level has been very successful in withdrawing the overhang,” Al Qahtani told the Energy Institute’s IP Week, an annual conference of the oil trading industry in London.

The stated goal of the supplycutting deal was to reduce oil inventories to the five-year average. The surplus of 74 million barrels is the smallest yet reported since the cuts began.

But Opec officials are increasingly talking of looking at different metrics. — Reuters