Overall conformity among the OPEC/non-OPEC oil producing countries which agreed to cut production roughly a year ago, reached 102% in the first nine months of 2017, leading to a considerable fall in the oil excess overhang, OPEC said Monday in its monthly report.
The cartel noted total OECD commercial stock levels saw a drop of 83 million barrels (MMBbl) of crude in the first three quarters of this year, compared to a build of 38 MMBbl in the same period last year, thanks to the “landmark” production adjustment pact extended this past May through March 2018.
“The stock draw came as global oil demand growth rose by 1.6 MMBPD compared to the same period in 2016, outpacing the 700,000 BPD net increase in global oil supply over the same period,” OPEC said.
During the period, non-OPEC oil producing countries, allied to OPEC, reduced their average production by 200,000 BPD, while the cartel cut its output by 600,000 BPD, the report said. Non-OPEC supply outside the pact rose by 900,000 BPD in the same period, Kallanish Energy learns.
“The excess overhang has fallen considerably, with the difference to the five-year average reduced by around 183 MMBbl since the beginning of this year, to stand at 154 MMBbl in September,” OPEC said. “Crude and products indicated surpluses of 129 MMBbl and 25 MMBbl above the seasonal norm, respectively.”
OPEC said the high conformity levels within the producing countries’ alliance “have clearly played a key role in supporting stability in the oil market and placing it on a more sustainable path.”
Further cooperation will be on the table on Nov. 30, when the allies will meet in Vienna “to assess market developments and consider how best to continue these efforts in the coming year.”