OPEC Sees Oil Markets Tighten Further Even As US Shale Booms

Oil pump jack

Oil pump jack

Brent crude for June delivery traded up about 0.3% at $72.26 a barrel in London.

The country produced about 3.810 million barrels per day of crude oil in February, the report read.

OECD oil stocks have now fallen for six of the last seven months and have declined sharply versus their five-year average, the key metric being used by OPEC to measure the success of its output cuts.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russian Federation have agreed to maintain oil output cuts until the end of 2018 aiming to reduce global inventories and boost oil prices.

While Opec members agreed to reduce output by about 1.2 million barrels a day, their actual cut last month was more than 60 per cent bigger. The IEA the estimate accounts for a healthy global economy and the 55% increase in crude prices since June.

OPEC itself estimates OECD oil stocks now stand at 43 million barrels above the five-year average. They mention that "it is not for us to declare on behalf of OPEC that it is mission accomplished", and that "if our outllok is accurate, it certainly looks very much like it".

The figure is below the 32.6 million bpd that OPEC sees as demand for its crude for the whole of 2018.

OPEC on Thursday blamed lower production in Angola, Venezuela, Algeria and Saudi Arabia for shrinking the group's crude production in March to 31.96 million b/d, a fall of 200,000 b/d.

"The Syrian escalation risk can not be fully written off, but we view that it deserves less of a premium than three days ago", Petromatrix said in a note.

Global inventories are on track to shrink by 600,000 barrels a day from this quarter through to the end of the year.

Indeed, the IEA noted that, expressed on a days of forward demand basis, OECD oil stocks have already been below the five-year average since January this year.

"Looking forward, a healthy global economic forecast for 2018, positive vehicle sales data in recent months, stronger 2018 yea-on-year United States product consumption in January and potentially tighter global product markets are expected to boost gasoline and distillates demand.", OPEC said.

US drillers added seven oil rigs in the week to April 13, bringing the total count to 815, the highest since March 2015, General Electric Co's (GE.N) Baker Hughes energy services firm said in its closely followed report on Friday.

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