OPEC Output Cuts Extended But Market Relevance Wanes

Opec opted to extend its output curbs to March 2018 when it met in Vienna on 25 May alongside ten non-Opec producers in its efforts to rebalance the market. But whether the strategy is working in the face of rebounding US shale output is up for debate.

The original six-month Opec/non-Opec cut agreement had been set to expire on 1 July. It was intended to take around 1.8mn b/d of supply away from the market – 1.2mn b/d from Opec and 558,000 b/d from non-Opec partners (MEES, 16 December 2016).

But nearly five months after the deal kicked in on 1 January global inventories appear as bloated as ever – not helped by buoyant early-2017 arrivals in consumer countries as a result of Opec producing flat-out right up to the end-2016 ‘deadline’. (CONTINUED - 2519 WORDS)

DATA INSIDE THIS ARTICLE

chart IEA Figures Imply Market Rebalancing* Remains On Course For Q4 2017... (Cumulative 2017 Stock Drawdown Mn Barrels)
chart ...But Opec’s Latest Numbers Show The Finish Line Getting Ever Further Away
table OPEC Wellhead Production, April 2017 (Mn B/D, Mees Estimates)
table OPEC^ 2017 Oil Export Revenues Set To Fall Short Of 2015 Levels ($Bn)