OUTPUT CUTS CLEARING GLUT
Opec, other producers considering extending deal beyond March
OUTPUT cuts by Organisation of the Petroleum Exporting Countries (Opec) and other oil producers are clearing a supply glut that has weighed on crude prices for three years, ministers said at a meeting yesterday to review the pact that expires in March next year.
Opec, Russia and several other producers have cut production by about 1.8 million barrels per day since January.
The group is considering extending the deal beyond its March expiry, although two sources said yesterday’s gathering was unlikely to make a specific recommendation on an extension.
Ministers on a panel monitoring the pact, comprising Kuwait, Venezuela and Algeria, plus nonOpec Russia and Oman, were meeting here after oil prices gained more than 15 per cent in the past three months to trade above US$56 (RM234) a barrel.
“Since our last meeting in July, the oil market has markedly improved. The market is now evidently well on its way towards rebalancing,” Kuwaiti Oil Minister Essam al-Marzouq said at the meeting.
Russian Energy Minister Alexander Novak said Opec and other producers now needed to work on strategy beyond March.
Officials said before the meeting that the Joint Ministerial Monitoring Committee would consider extending the supply cut pact. But two Opec sources said the ministers were not likely to make a specific recommendation for an extension.
The committee can make policy recommendations for the wider group of Opec and nonOpec producers, which meets in November.
Global oil inventories have shown signs of falling, although Opec-led efforts to cut stockpiles to their five-year average has taken longer than expected. Oil prices remain at only half their level of mid-2014.
Kuwait’s minister said there were a “number of positives” in the market, including stock levels in industrialised Organisation for Economic Cooperation and Development states last month that were 170 million barrels above the five-year average, down from 340 million barrels in January.
He also said oil in floating storage was falling and cited a shift of benchmark Brent prices into backwardation, a market condition in which it is more attractive to sell oil immediately rather than storing it for later sale, indicating tighter supplies. Reuters