A Review of the Nigerian Energy Industry

OPEC cautious on oil outlook despite end of global glut

*A man fixes a sign with OPEC’s logo next to its headquarter’s entrance before a meeting of OPEC oil ministers in Vienna, Austria. REUTERS/Heinz-Peter Bader.

13 June 2018, London – OPEC has said the oil market outlook in the second half of the year is highly uncertain even though the producer group’s figures show a global glut has ended, suggesting exporters will be in no rush to relax output curbs at a meeting next week. 

OPEC, Russia and other non-OPEC producers have been cutting output since January 2017 to get rid of excess supply and boost prices. The deal’s main goal was to reduce oil inventories in developed nations to that of the five-year average.

In a report on Tuesday, OPEC said inventories in those nations in April fell to 26 million barrels below the five-year average. That’s down from 340 million barrels above the average in January 2017.

Still, OPEC in the report was cautious on the outlook for the rest of 2018, citing a faster-than-expected rise in non-OPEC oil production and the chances of global demand weakening.

“Recently, crude oil futures have lost some momentum amid uncertainty as traders prepare for potentially more supply returning to the market,” OPEC said.

“While oil demand in the U.S., China and India shows some upside potential, downside risks might limit this potential going forward.”

The report said OPEC members were still cutting more than needed under the supply deal, even though output in May rose and top exporter Saudi Arabia is boosting supply.

OPEC output climbed by 35,000 barrels per day to 31.87 million bpd, OPEC said. Saudi Arabia reported to OPEC its own output rose back above 10 million bpd.

– Reuters
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