OPEC, allies to keep oil market stability beyond 2020

A poor economic outlook has depressed oil prices. (Reuters)
Updated 15 October 2019

OPEC, allies to keep oil market stability beyond 2020

  • Compliance with production quotas among OPEC and its allies was at 136 percent, says Barkindo

NEW DELHI: OPEC and its allies are committed to maintaining oil market stability beyond 2020, with physical supplies relatively tight globally, OPEC Secretary-General Mohammad Barkindo said on Tuesday.

He added that compliance with production quotas among OPEC and its allies was at 136 percent, curbing global supplies, while production growth in North America including US shale basins was decelerating.

OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020 to support oil prices. The producers are scheduled to meet again on Dec. 5-6.

“I have been hearing a resounding chorus from all the players that they are determined not to allow a relapse to the downturn that we just navigated out of,” Barkindo told the India Energy Forum by CERAWeek, referring to a period of low oil prices in 2014-2015 that had led OPEC to cut output. 

“They will do whatever is possible within their powers to ensure relative stability is sustained beyond 2020,” he said.

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OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020.

In its latest monthly report for October, OPEC trimmed its forecast for world economic growth in 2020 to 3 percent from 3.1 percent. The report stated: “It seems increasingly likely that the slowing growth momentum in the US will carry over to 2020.”

A poor economic outlook has depressed oil prices, with Brent down about 22 percent from its 2019 peak of $75.60 a barrel reached on April 25.

The US-China trade war is affecting the global economy and oil demand, and financial markets have an increasingly bearish view of economic growth, Barkindo said.

Still, India remains a major driver of global oil demand with growth of 127,000 bpd in August, he said.


Oil prices rise as faith in supply cuts grows

Updated 26 May 2020

Oil prices rise as faith in supply cuts grows

  • Producers are following through on commitments to cut supplies as fuel demand picks up with coronavirus restrictions easing
  • OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices

NEW YORK: Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). US West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.
Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.
“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the US rig count hit a record low of 318 last week.