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The initial deal struck in November 2016 was for these restrictions to be in place for six months from January, but they are now likely to be extended into the second half of 2018 at least.
While the shift towards balance is much slower than Opec had hoped, the outlook has improved in recent weeks.
Brent averaged above $55/B in September, the first time it has achieved this since February. It peaked at $59.02/B on 25 September, the highest since July 2015 and was trading at around $57/B as MEES went to press.
Moreover, Brent has now swung into backwardation, with futures prices below front-end prices. This ought to discourage stockpiling and facilitate the unwinding of inventories. Opec Secretary General Mohammad Barkindo estimated on 25 September that OECD crude inventories had fallen to 170mn barrels above the five-year average, down from 340mn above in January.
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