The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday that the surplus in global oil stocks is near evaporation, thanks to demand for energy and supply cuts. OPEC’s forecast for production from rivals who benefited from rising oil prices dropped.
Shale oil production in the United States has been booming throughout 2017, after OPEC cut production together with Russia, as an attempt to support global oil prices. However, with the collapsing of oil production in OPEC member Venezuela, and the problems in countries such as Libya and Angola, the group of oil-exporting countries is still producing less than its targets, meaning that the world needs to use stocks to meet growing demand.
OPEC said in its monthly report that oil stocks in the developed world reflected a rise in January, falling by 17.4 million barrels in February to 2.854 billion barrels, or about 43 million barrels above the past five years average.
“We have achieved an over 150 percent conformity level,” OPEC Secretary-General Mohamed Barkindo told Reuters in New Delhi, referring to OPEC’s commitments under the supply cut agreement. “We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400 million barrels to about 43 million above the five-year average,” Barkindo said.
Inventory levels now stand at 207 million barrels below their level in February 2017, with crude stocks having a surplus of 55 million barrels, and product stocks are standing at a deficit of 12 million. OPEC also noted that positive car sales data in recent months and increased consumption of US products in January 2018 could lead to increased demand for gasoline and distillation in the global markets.
OPEC, Russia and many other non-OPEC oil producers began curbing the supply in January 2017. The agreement is in place until the end of the year, and the organization will hold its next meeting in Vienna, in June, in order to decide on its next course of action.