OPEC Says Oil Goal's Close as Stockpile Glut Shrinks FurtherBloomberg News
Inventory overhang at about 130 million barrels: Barkindo
Strong economic growth is seen supporting global oil demand
OPEC is near its goal of rebalancing the oil market as an inventory overhang targeted by its output curbs continues to shrink, according to the group’s secretary general.
The stockpile glut -- including crude as well as oil products -- has shrunk to 130 million barrels above the five-year average, Mohammad Barkindo said in a Bloomberg Television interview in Beijing before the release of OPEC’s monthly market report on Wednesday. The group last month estimated the overhang at about 154 million barrels.
That’s a sign that the Organization of Petroleum Exporting Countries and its allies including Russia are progressing in their efforts to curb production and end an oversupply that has weighed on prices and battered their economies since 2014. The group plans to meet in June to assess the market and consider halting the cuts, which they agreed last month to extend until the end of next year.
“We are beginning to see a return to stable markets,” Barkindo said. “Something that has eluded us for several years.”
Barkindo has previously said the inventory glut has shrunk from a record of more than 380 million barrels as OPEC implemented its output cuts. The overhang in oil-product stockpiles is less than 30 million barrels, he said on Wednesday, adding that nations that are part of the production deal have conformed to the agreement by more than 100 percent on average over January to October this year.
Brent crude, the benchmark for more than half the world’s oil, rose 1.4 percent to $64.24 a barrel at 9:51 a.m. in London. Prices climbed above $65 for the first time since June 2015 on Tuesday.
OPEC and its partners are working on a continuity strategy for adjusting supply beyond their existing deal, he said, when asked about the group’s exit strategy from the output accord. The nations will seek to develop their partnership beyond the rebalancing of the market, according to Barkindo.
While stockpiles have shrunk, strong economic growth -- especially from China -- are also supporting the oil market, according to Barkindo. Global oil demand is forecast to grow by 1.5 million barrels a day in 2018, the same as in 2017, he said.
“The fundamentals of the oil market have not been this strong in the past several years,” he said in the interview. “Both the global economic rebound, as well as strong oil market fundamentals, for the first time in so many years are all pointing to the right direction.”
— With assistance by Tom Mackenzie, and Sarah Chen