OPEC, Non-OPECMullExtending Output Cut By Six Months

The Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC Joint Ministerial Monitoring Committee (JMMC) yesterday agreed to review whether a global deal to curb oil output should be extended by six months.

JMMC convened in Kuwait City for its second meeting yesterday where it announced that, based on the report of the Joint OPEC and non-OPEC Technical Committee (JTC) for the month of February 2017, OPEC and participating nonOPEC countries have continued their progress towards full conformity with their voluntary adjustments in production.

According to a statement by OPEC, the agreement to cut 1.8 million barrels per day, which came into effect on January 1, 2017, is for six months and is extendable for an additional six months, depending on the status of supply and demand, including global inventories.

“The JMMC expressed its satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 per cent conformity. As at February 2017, the OPEC and participating non-OPEC countries achieved a conformity level of 94 per cent, an increase of 8 per centage points over the January 2017 performance. This demonstrates the willingness of all participating countries to continue their cooperation,” said the statement.

The statement added that JMMC noted that certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have slowed down the positive impact of the production adjustments on inventory drawdowns.

The meeting also observed the liquidation of positions by financial players in the market.

“However, it was felt that the end of the refinery maintenance season and a noticeable slowdown in the US stock-build, as well as the reduction in floating storage, will support the positive efforts undertaken to achieve stability in the market,” the group said.

JMMC said it also requested that the JTC with the OPEC Secretariat review the oil market conditions and revert to the JMMC in April 2017 regarding the extension of the voluntary production adjustments as stipulated in the Declaration of Cooperation, in order to ensure market stability.