The happy theme is more widely spread, for example from Saudi Energy Minister Khalid al-Falih speaking with the media following the meeting:
Implementation of agreed cuts had been “fantastic”
He hoped for 100% compliance in February
Oversight of compliance will continue:
A technical joint committee (JTC) would be created comprising a representative for each of the five members of the monitoring committee and as well as the OPEC presidency (currently held by Saudi Arabia)
The JTC will cooperate with the OPEC Secretariat in compiling production data
Data to be presented to the ministerial monitoring committee by the 17th of every month
There will be two meetings of the JTC ahead of the next ordinary OPEC meeting in Vienna on May 25
Producers have already cut output by 1.5 mbpd, according to Saudi minister of energy Khalid Al-Falih. He said his country along with Kuwait and Algeria have already taken more off the market than required.
Meanwhile, Russian oil minister Novak said progress in cutting Russian production was “ahead of schedule”.
The monitoring committee of OPEC are meeting today and tomorrow. The topic won’t yet be compliance because we’re not yet at the end of the first month of the agreement. Instead, they will talk about how to monitor and measure.
The total amount of oil expected to be removed from the market for six months is 1.8 mbpd. Skeptics argue that much of the ‘cut’ is optics and that countries were producing beyond capacity in the lead-up to the agreement or had scheduled natural/seasonal depletions.
Influential Algerian oil minister Boutarfa repeated a comment from his Saudi counterpart, who said last week that quotas beyond June may not be necessary.
“If we really comply by 80-90%, it may not be necessary to continue,” he said.
WTI crude finished $1.10 higher on Friday to $53.22 but failed in a test of downtrend resistance after a large jump in oil drilling rigs.
Saudi Arabia’s oil minister said that the supply cuts agreed by Opec and non-Opec countries at the end of last year may not need to be extended beyond June, as rising demand and strong compliance should have pushed the market towards balance by then.
Khalid al Falih, speaking at an industry event in Abu Dhabi, struck a bullish pose saying the cuts, which began on January 1, would have their “full impact by the first half” of 2017.
“We don’t think it’s necessary given the level of compliance…and given the expectations of demand,” Reuters reported.
“Based on my judgement today it’s unlikely that we will need to continue (the agreement) – demand will pick up in the summer and we want to make sure that the market is supplied well. We don’t want to create a shortage or squeeze.”
He added, however, that the group could still extend the six-month deal “if there was a need”.
Brent crude, the international oil benchmark, was up 38 cents at $55.83 a barrel by 10am London time while US benchmark West Texas Intermediate gained 32 cents to $52.69 a barrel.