OPEC chief says floating storage shrinking as market rebalances

Ann Santiago
October 12, 2017

Speaking of rising crude oil price, Mohammed Barkindo said that for India, which is dependent on OPEC countries for 90% of its imports, will require the active participation of both OPEC and other non-OPEC countries to restore balance.

OPEC and other producers are looking to create an extension to their deal to cut production ahead of the official November meeting of the cartel.

Oil futures fell more than 2 per cent on Friday, ending Brent crude's longest multi-week rally in 16 months as oversupply concerns reappeared as producers have started hedging future drilling. Last month, it expected a 590,000 bpd year-over-year increase to 9.84 million bpd.

"It is a big market and demand is very strong".

"OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels". "Between the first half and second half this year, demand growth is nearly about 2 million barrels (per day), which is very robust", he said.

OPEC lowered its estimate of supply growth from non-OPEC countries next year, seeing a rise of 940,000 bpd, down 60,000 bpd from the previous forecast, due to downward revisions to Russian Federation.

"The supply forecast for next year will be revised downward if higher oil prices and lower costs do not materialize", the report said.

It also stated that prices may fall again in the second quarter of the next year to $48 a barrel when the oil output is expected to surge again. OPEC does not issue price forecasts.

After settlement, crude prices pared gains when the industry group the American Petroleum Institute said its data showed USA crude stocks rose unexpectedly last week, while gasoline inventories decreased and distillate stocks built.

Opec said it pumped 32.75 million bpd in September, up about 89,000 bpd from August.

Rob Haworth, senior investment strategist at U.S. Bank Wealth Management said OPEC and oil bulls were "hoping U.S. producers slow down production and make further progress on inventory cuts".

The report's OPEC production figures mean compliance with the supply cut by the 11 members with output targets remains high at 98 percent, according to a Reuters calculation. Should Opec keep pumping at similar levels to September, the market could move into a deficit next year, the report indicates.

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