..Oil prices trade at $64.58 per barrel
By CHIKA IZUORA, Lagos
Key oil producers appear calm at the level of discipline by both members of the Organisation of Petroleum Exporting Countries (OPEC), and non-OPEC members who endorsed output cut to stabilize gliding oil price which recorded highest compliance in November.
According to Kuwait’s oil minister, Bakheet al-Rasheedi, the compliance of OPEC and independent producers with oil output cuts, in force since January, reached an unprecedented level of 122 percent last month.
“I am pleased to announce that November conformity is the highest since the beginning of implementation of the agreement in January. It has reached 122 percent,” said Bakheet al-Rasheedi, quoted by the official news agency KUNA.
“This is a strong signal to the oil market that OPEC and non-OPEC members participating are committed to the success of this agreement and are willing to do everything possible to restore the oil market balance.”
The 14-member cartel and 10 independent producers, including Russia, decided on December 1 to extend the cut of 1.8 million barrels per day until the end of 2018.
The aim is to reduce a global excess in supply that has pushed oil prices lower and left a huge hole in the finances of producer nations. The move has helped oil prices climb from less than $30 a barrel in early 2016 to the current level of around $60.
Meanwhile, oil prices were stable yesterday after posting strong gains late in the previous session on the back of a drop in U.S. crude inventories.
Another rise in U.S. oil production, which is close to breaking through 10 million barrels per day (bpd), is capping crude prices as it undermines efforts led by OPEC and Russia to tighten the market through withholding output this year and next.
The rebalancing of supply and demand is a result of OPEC and Russian-led voluntary production cuts. Despite this, the energy minister of Saudi Arabia, the world’s top crude exporter and OPEC’s de-facto leader, said it would take more time to rein in the global supply overhang, which was created by strong global production increases in the years up to 2015.
“We expect the first few months of 2018 to be either flat or a build (in inventories) as it is typically the case with the seasonality with the oil market,” Saudi Arabia’s energy minister Khalid al-Falih told Reuters.
OPEC’s and Russia’s efforts to rebalance markets and prop up prices are being undermined by rising production in the United States, which does not participate in the deal to cut. U.S. crude production hit 9.79 million bpd last week, its highest since the early 1970s, the only time American production breached 10 million bpd.
This brings U.S. output close to that of top producers Saudi Arabia and Russia, which pump around 10 and 11 million bpd.
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