More producers call to roll over oil curbs

Bloomberg

Venezuela, Iraq and Oman added their support for a possible
extension of global oil-production cuts beyond June as mom
entum builds among OPEC
members and other crude producers to prolong the strategy to re-balance the market and prop up prices.
Oil minsters for the three countries commented on Sunday, a day after Algeria’s Energy Minister Noureddine Boutarfa called for an extension because he said the strategy is succeeding in paring global inventories. The
ministers met in Kuwait City to discuss compliance with the pledged reductions. So far, five OPEC members, including Kuwait and Angola, have backed an extension of the cuts.
“We are ready to support” prolonging the six-month deal, which took effect in January, Venezuela’s Oil Minister Nelson Martinez told reporters on Sunday before the meeting. “It does make sense to extend the agreement for another six months — maybe at least,” said his Omani counterpart, Mohammed Al Rumhy. Oman, unlike Venezuela, isn’t a member of the Organization of Petroleum Exporting Countries.
Russia is moving ahead with its own reductions to curb a glut. “It’s important to accomplish last year’s deal first,” Russia’s Energy Minister Alexander Novak said before the meeting. Russia will target its pledged reduction of 300,000 barrels a day by the end of April, he said.
Kuwait this month became the first nation to call for extending the production cuts, with Oil Minister Issam Almarzooq saying inventories had grown more than expected. OPEC and 11 other major producers including Russia agreed last year to slash production, spurring a 20 percent increase in Brent crude prices during the last five weeks of 2016. The rally stalled
this year as US output and supplies continued to grow. OPEC ministers will meet May 25 in
Vienna to decide whether to extend the deal.
Brent crude futures closed on Friday at $50.80 a barrel in London, down 96 cents, or 1.9 percent, for the week. The benchmark grade has dropped 11 percent in 2017 and reached a low for the year of $49.71 a barrel on March 22.
The joint ministerial monitoring committee, comprising three OPEC members and two producers outside the group, will
discuss the possibility of prolonging the cuts beyond June, Novak said. With US crude stockpiles swelling to record levels and prices sinking below $50 a barrel, OPEC and its partners have little choice but to keep going, according to all 13 analysts surveyed by Bloomberg.
Oil inventories are high because of low US demand and higher supply, and the market should re-balance in the second half of the year, OPEC Secretary-General Mohammad Barkindo told reporters in Kuwait.
Inventories in countries in
the Organisation for Economic Co-operation and Development are currently 282 million barrels higher than their five-year
average, he said at the meeting on Sunday.
Khalid Al-Falih, the energy minister of OPEC’s biggest producer, Saudi Arabia, said in a Bloomberg Television interview on March 17 that the deal will
be maintained if oil stockpiles are still above their five-year
average.
It’s too early to decide on an extension of the output cuts, and OPEC will take up the issue in May, Barkindo said at Sunday’s meeting, during which ministers will monitor compliance with the targeted reductions.
OPEC’s compliance rate was 106% in February, and non-OPEC nations, including Russia, have reached compliance of 64 percent, Kuwait’s Almarzooq said Sunday. The combined compliance rate of both was 94 percent, he said.
Iraq, OPEC’s second-biggest producer after Saudi Arabia, will support extending the cuts if other members of the group also agree to do so, Oil Minister Jabbar Al-Luaibi told reporters. Iraq has reduced output and exports by 187,000 barrels a day under the accord, and its cuts will reach the promised level of 210,000 in a few more days, he said. The country has pumped 4.312 million barrels a day in March, down from 4.35 million in February, Al-Luaibi said.
Algeria’s Boutarfa asked for the cuts to be extended for three or four months.
A “clear impact” of the deal, including on US stockpiles, will be visible in the next few weeks,
he said in a video Saturday on the Algerian energy ministry’s Facebook page.
Russia has reduced production by 185,000 barrels a day from October, Novak said. If it reaches its target of cutting 300,000 barrels a day, Russia’s production would be lowered to 10.947 million barrels a day — accomplished by the end of April — from 11.247 million barrels a day in October, according to Russia’s Energy Ministry.