OPEC sees oil markets tighten further

London : The global oil stocks surplus is close to evaporating, OPEC said yesterday, citing healthy energy demand and its own supply cuts while revising up its forecast for production from rivals who have benefited from higher oil prices.

U.S. shale oil output has been booming over the past year since OPEC reduced its own production in tandem with Russia to prop up global oil prices.

But as oil production collapsed in OPEC member Venezuela and is still facing hiccups in countries such as Libya and Angola, the oil exporters’ group is still producing below its targets meaning the world needs to use stocks to meet rising demand.

The Organization of the Petroleum Exporting Countries said in its monthly report oil stocks in the developed world reversed a rise in January to fall by 17.4 million barrels in February to 2.854 billion barrels, around 43 million barrels above the latest five-year average.

“We have achieved an over 150 percent conformity level,” OPEC Secretary-General Mohammad Barkindo told Reuters in New Delhi, referring to OPEC’s commitments under the supply-cutting pact. He said the glut has effectively shrunk by nine-tenths since the start of 2017.

“We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400 million barrels to about 43m above the five-year average,” Barkindo said.

Stock levels are now 207 million barrels below their level in February 2017, with crude stocks in a surplus of 55 million barrels and product stocks in a deficit of 12 million.

“Looking forward, a healthy global economic forecast for 2018, positive car sales data in recent months, stronger 2018 yea-on-year U.S. product consumption in January and potentially tighter global product markets are expected to boost gasoline and distillates demand ...,” OPEC said.

“High conformity levels observed by OPEC and non-OPEC producing countries ... should further enhance market stability and support crude and product markets in the months ahead.”

The 14-member, Vienna-based producer group said its collective output, according to secondary sources, fell 201,000 bpd to 31.96 million bpd in March from February, driven by declines in Angola, Algeria, Venezuela, Saudi Arabia and Libya.