*Says OPEC’s done much to stabilise market
OpeOluwani Akintayo with Agency Reports
09 July 2017, Sweetcrude, Lagos — President of the Organisation of Petroleum Exporting Countries, (OPEC’s) Conference President, Khalid A. Al-Falih, has put to rest several reports doing the rounds that the Cartel has failed in its age-long duty of controlling the market, and boosting the price.
Speaking in a statement over the weekend, said although the market was had been faced with excess supplies and inventories on a generally rising trend, the OPEC and non-OPEC cut deal, has done a lot to reduce the glut and boosting the price.
As a result of the glut, according to him, market sentiment was distinctly pessimistic, and investment flows were drying up.
But since the cut started, he said, “Outstanding results have been recorded”.
He said that for example, the Organisation for Economic Co-operation and Development, (OECD’s), commercial stocks have seen an “absolute reduction” of 31 million barrels while floating storages have declined by some 30 million barrels during that same period.
“Furthermore, following two consecutive years of decreased global Exploration and Production, E7P investments- when since 2014 there has been a decline in investments of roughly 40 percent- investments have stabilised this year at 530 billion dollars. This stabilisation is attributed to the presence of clear market leadership and the expectation of a balanced market in the near future, given the cooperative actions taken by OPEC and non-OPEC producers,” he said.
“In short, we have made tremendous progress in rebalancing the market and giving the market strong direction throughout determined actions and a high degree of conformity,” he added.
Earlier in the week, Bank of America had said that OPEC’s attempt to salvage crude oil glut in the international market in order to boost the price, has backfired.
According to one of its representative, Merrill Lynch, OPEC’s failure to increase oil price, will further “expose economies” to harsh conditions this year.
She said when the Cartel decided to increase production and exports before it agreed on the cut last year, it immediately made the market vulnerable, opening the door for the return of the U.S shale oil.
It also blamed OPEC for the recovery of production in Nigeria and Libya.
“With output set to rise further, our oil supply/demand balances now point to an average deficit of 210, 000 barrels per day in 2017 and 90, 000 in 2018,” she told The National on Tuesday.
The deficit will not be enough to make a significant dent in the 3 billion-barrel-plus overhang OECD oil inventories, the report, led by Francisco Blanch, the head of commodities research said.
Merrill Lynch then cut the forecast for the world benchmark North Sea Brent crude oil by $2 to US$50 per barrel for this year and $54 for next year.
Merrill’s stand of blaming OPEC for recoveries of production and exports in Nigeria and Libya comes on the heels of reports that both countries (Nigeria and Libya), may be asked by the Cartel, to put a peg on oil exports this month.
OPEC producers agreed last month to extend output cuts of about 1.8 million bpd until March 2018.