The monitoring committee overseeing the OPEC/non-OPEC production cut agreement said that oil market fundamentals were improving, even as some ministers have begun to discuss the possible need for deeper output reductions.
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In a statement distributed by OPEC, the committee said it “took note of the recent market development and expressed confidence that the oil market is moving in the right direction.”
The committee, composed of ministers from Kuwait, Russia, Venezuela, Algeria and Oman, said it will meet July 24 in St Petersburg, Russia. It is empowered to recommend further cuts or any other adjustments to the deal, as it sees fit, officials have said.
The deal, now extended through March 2018, calls on OPEC to cut 1.2 million b/d and 10 major non-OPEC countries, led by Russia, to cut a collective 558,000 b/d.
Iranian oil minister Bijan Zanganeh on Wednesday said OPEC ministers had already been holding discussions about increasing the cuts given the state of the oil market, although some members maintain that the recent extension of the deal needs more time to play out.
Saudi energy minister Khalid al-Falih and Russian energy minister Alexander Novak, who represent the largest producers in the OPEC/non-OPEC coalition, have said in recent days that they see no need to change the production cut agreement, with stock drawdowns expected to accelerate in the next three to four months.
Participants have said the deal is aimed at getting OECD oil stocks down to their five-year average. OPEC’s monthly oil market report earlier this month estimated that OECD commercial stocks had fallen in April for the third straight month and were at 251 million barrels above the five-year average.
The committee said compliance with the cuts in May hit a collective 106%, the highest it has been since the deal began in January.
While not all members have cut down to their quotas, others — notably Saudi Arabia — have exceeded their required cuts, making up for the difference.
Saudi Arabia has cut 110,000 b/d more than required through the first five months of the deal, according to the latest S&P Global Platts OPEC survey, one of six secondary sources used to monitor compliance.
The committee “further encouraged all participating countries to press on towards full conformity and maintain this level for the benefit of producers and consumers alike, as has been consistently advocated.”