“OPEC” expects a further decline in global oil stocks

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OPEC expects a further decline in global oil stocks

BP sees continued strong demand for crude for some time


Tuesday – 27 Shawwal 1442 AH – 08 June 2021 AD Issue No. [
15533]


Oil stocks fell in April from the same period a year ago (Reuters)

London: «Middle East»

Mohamed Barkindo, the Secretary-General of the Organization of the Petroleum Exporting Countries, said on Monday that the Organization of the Petroleum Exporting Countries and its allies expect a further decrease in oil stocks in the coming months, indicating the success of the producers’ efforts to support the market.
During his online participation in the Nigeria International Petroleum Summit, Barkindo added that oil stocks in the developed world fell by 6.9 million barrels in April, a decrease of 160 million barrels from the same period a year ago, which is the first announcement of this figure.
“We expect to see further declines in the coming months,” he said. In April, “OPEC” and its allies, which is known as the “OPEC +” group, decided to return 2.1 million barrels per day to the market from May to July. Producers adhered to this decision at a meeting last week, which pushed crude prices higher.
“The market has continued to react positively to the decisions we took, including to adjust production levels upwards starting in May of this year,” Barkindo said.
He pointed out that vaccination campaigns and “huge financial stimulus” contributed to the optimistic expectations, but added that the discrepancy in the availability of the vaccine globally, the high inflation rate and the continued spread of “Covid-19” represent continuous risks to the demand for crude.
He said that the rate of commitment of “OPEC +” to the agreed production cuts amounted to 114 percent in April.
The group cut production by a record 9.7 million barrels per day last year, after the collapse in demand due to the “Covid-19” pandemic. Beginning in July, the production cuts that will remain in effect will amount to 5.8 million barrels per day.
During a subsequent discussion in one of the conference committees, Barkindo stated that OPEC does not deny climate change, but the global economy still needs oil.
“We encourage all member states to continue investing in renewable energy, but also to continue to meet the demand for hydrocarbons,” he said.
Meanwhile, Bernard Looney, CEO of energy giant BP, expected a strong recovery in global demand for crude oil, and expected this recovery to continue for some time, while keeping US shale oil production under control.
He added, “There is a lot of evidence that indicates that demand will be strong, while it seems that shale oil will remain disciplined,” explaining: “I think the current situation can continue as it is for some time.”
Looney’s expectations were in line with the expectations of other executives in the oil industry, which are supported by a strong recovery from the repercussions of the “Corona” pandemic in the United States, China and Europe.
“I believe in vaccines, and vaccines are starting to give positive results,” Looney said. “We just need to get to more places.”
He added that the company increased the number of drilling rigs in its shale oil business in the United States after reducing it last year, but that its activity in the region remained below pre-pandemic levels in the first quarter of the year.
In the meantime, oil declined during trading yesterday, after hitting a two-year peak above $72, due to pressure caused by the possibility of increasing Iran’s exports, but the recovery in demand and supply restrictions from “OPEC +” provided some support.
Demand increases in the United States and Europe as restrictions related to “Covid-19” are eased. India is also easing isolation measures in another step that could boost fuel consumption. OPEC and its allies adhered to agreed production limits until July.
Brent crude fell 0.5 percent to $71.47 by 15:15 GMT, after hitting $72.27 earlier, its highest level since May 2019.
US West Texas Intermediate crude touched $70 for the first time since October 2018, but reversed the trend to trade down 0.6 percent to $69.20.


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