BusinessDay 28 Feb 2018

Wednesday 28 February 2018
marketinsight
Decline in US crude stocks drives oil prices higher
Decline in
the US
crude oil
inventories
n u d g e d
oil prices higher, the
US Energy Information
Administration (EIA)
data showed. Commercial
crude stocks fell 1.6
million barrels, or 0.4
percent, to 420.5 million
barrels for the week
ending February 16, EIA
data reported. However,
the market expectation
for crude inventories
was an increase of 1.8
million barrels.
After crude stocks surprisingly
fell against expectations,
oil prices increased
their gains.
International oil
benchmark Brent crude
was trading at $66.28 a
barrel with a 1.3 percent
daily gain, while American
benchmark West
The Organization
of the Petroleum
Exporting Countries
(OPEC) and
participating non-OPEC
countries achieved the
highest level of 133 percent
in January, OPEC announced.
According to the statement,
the Joint OPEC and
Non-OPEC Ministerial
Monitoring Committee
(JMMC) declared that
member and participating
countries started 2018
with an outstanding conformity
level with their
voluntary adjustments in
production.
“Throughout 2018, the
JMMC will focus on striving
to maintain or exceed
full conformity by all participating
countries,” the
statement read.
The JMMC expressed
satisfaction with the overall
results and stressed the
importance of vigilance
and the need to avoid
complacency amid the
recent market volatility.
Texas Intermediate was
at $62.70 per barrel with
a 1.6 percent daily gain.
“The performance was
not uniform and conformity
was boosted by
several over-performing
countries,” said the
JMMC, which urged all
participating countries
to continue intensifying
their collective and individual
efforts to expedite
the rebalancing of the oil
market.
“This solid performance
during the first
month of the second
Strategic Petroleum
Reserves, which are not
included in the US com-
mercial crude stocks, fell
by 0.7 million barrels, or
0.1 percent, to 664.9 million
barrels for the week
ending February 16, the
EIA data showed.
The US crude oil production
decreased slightly
by one thousand barrels
per day (bpd) to 10.27
million bpd for the week
ending February 16, according
to the EIA.
Decline in crude output
was caused by a fall
in production in Alaska
by 11,000 bpd to 508,000
bpd. In the Lower 48
states of the US, crude oil
production increased by
10,000 bpd to 9.76 million
bpd.
The US crude oil exports
rose 722,000 bpd
to 2.04 million bpd while
imports of crude oil declined
867,000 bpd to 7.02
million bpd, according to
the EIA data.
Oil output cut records highest conformity level in January 2018
year of the Declaration of
Cooperation continues
a remarkable upward
trend seen throughout
2017,” said the organization
and added that it
demonstrates the commitment
of participating
countries to the restoration
of market stability,
in the interests of producers,
consumers and
the global economy. The
JMMC’s next meeting
will be held in April, in
Saudi Arabia.
The first joint OPEC
and Non-OPEC Producing
Countries’ Ministerial
Meeting was held on
December 10, 2016 to
accelerate the stabilization
of the global oil market
through adjustments
in total oil production of
around 1.8 million barrels
per day. As a result, member
and participating
countries decided to adjust
oil production from
January 1.
At the second joint
ministerial meeting, held
on May 25, participants
decided to prolong the
output deal for another
nine months starting July
1. Furthermore, at the
third meeting on Nov. 30,
the countries’ ministers
agreed to extend the oil
cut pact until 2018.
The JMMC was established
based on a decision
taken following
OPEC’s 171st ministerial
conference on November
30, 2016.
C002D5556
OPEC Flakes
OPEC wants to
ensure enough
upstream investment
to
adequately supply the
market in the decades to
come, providing the impetus
behind efforts to
formalize its cooperation
with Russia and other
allies beyond their production
cut agreement,
Suhail al-Mazrouei, UAE
energy minister said.
Mazrouei holds the
rotating OPEC presidency
this year. He said
finalizing a pact with
non-OPEC partners on
continued oil market
management was a personal
“aspiration” of his.
But he had no details
on what parameters the
agreement would entail,
saying it was still in the
“draft stage” and needed
to be discussed with other
ministers.
The minister reiterated
that despite over
107 percent compliance
by OPEC/non-OPEC in
2017, their job is not yet
OPEC and its allies,
including
Russia, may
next year ease
the crude-output curbs
that have helped prices
recover from the worst
crash in a generation,
according to Khalid Al-
Falih, Saudi Arabia’s oil
minister.
With the market moving
toward equilibrium
and bloated inventories
shrinking, the next step
for global producers
BUSINESS DAY
07
WEST AFRICA
ENERGY intelligence
OPEC seeks more upstream
investment to meet future demand
complete. “2018 is going
to be a year of solid commitment,”
he said.
“The intention for the
goal is to work together
in the future to ensure we
have enough adequate
actions to help market
stability.”
“Let’s not assume
there is something to be
shared today,” Mazrouei
had said earlier in the day
“The level of understanding
we have seen in this
group and achieving a
mutual interest has contributed
to the balance
in the market and also to
the world economy, giving
us hope that we can
draft something that is
acceptable to everyone.”
OPEC, allies may ease output curbs
will be to phase out the
reductions, Khalid Al-
Falih said. The nations
taking part in the supply
curbs are currently
studying what a crude
re-balancing will entail,
and will announce their
next steps once that is
analyzed, he said.
The production curbs
may be eased “sometime
in 2019, but we do not
know when and we don’t
know how,” Al-Falih said.
“What we know is that
it’s going to be done in a
way that it will not in any
way disturb the balance
and undo the hard work
since 2016.”
A deal between the
Organization of Petroleum
Exporting Countries
and its partners
aimed at shrinking a
global glut began in 2017
and runs through the
end of this year.