*As Platts pegs OPEC cut deal compliance at 106%
21 November 2017, Sweetcrude, Lagos — The Organisation of the Petroleum Exporting Countries, OPEC, has said global crude oil surplus in the market will linger until September 2018.
The submission was arrived at as a result of the internal estimates carried out by the organisation.
According to OPEC’s estimate, the surplus would be totally eradicated when stocks in Organisation for Economic Cooperation and Development, OECD countries decline to their five-year average.
The OECD is made up of the world’s developed economies.
OPEC’s forecast comes on the heels of talks that the organisation alongside its Non-OPEC partners like Russia, would at its next general meeting, extend the cut deal till September 2018.
However, Head of Global Oil analytics at S&P Global Platts, Gary Ross, said: “there is a general belief that OPEC would like to extend the agreement to the end of September but given the strength in prices, they may be reluctant to do that”.
“That may lead them to a halfway measure,” he added.
OPEC and its Non/OPEC partners will meet on November 30.
OPEC agreed in November last year, to cut output by 1.8million barrels per day from October 2016 levels from 32.5million barrels a day to reduce market glut.
Russia and other Non-OPEC producers also pledged to cut nearly 600, 000 barrels per day starting from January, extending to March next year.
Commenting further, Ross said, “if OPEC wants to lower OECD inventories to a five-year average, it has to agree on an extension”.
“They cannot manage a reduction to that level by next year March. It is better to agree on an extension now and turn a blind eye to cheating that to end the deal and start negotiations all over again if prices decline” added Anas Alhaji, an independent energy expert and former chief economist at NGP Energy Capital Management.
Commending OPEC for the feat achieved with the cut deal, Ross said compliance with the deal has been excellent.
“Compliance has been, by historical measure, excellent,” he told MarketWatch.
A recent survey of OPEC and oil industry officials and analyst conducted by S&P Global Platts showed that compliance among 12 members of OPEC that have quotas under the pact, stood at 106 percent from January through October.