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OPEC, other producers committed to re-balancing oil markets - IEA
October 12, 2017, 3:59 pm

The OPEC group and other producers, who have agreed on production restraint, have been largely successful in stabilizing the oil market and are determined to maintain this objective heading into 2018, the International Energy Agency (IEA) said on Thursday. In its latest monthly 'Oil Market Report', the IEA said that closer cooperation is being achieved between OPEC and major non-OPEC suppliers like Russia on the future path to keep markets balanced and prevent any major volatility on prices.

"A few weeks ahead of the next OPEC meeting, Saudi Arabia and Russia have strengthened their relationship with a high level summit, and a series of investment agreements accompanied by statements suggesting that the current oil output cuts might be tightened," the report noted.

The IEA added that "there is little doubt that leading producers have re-committed to do whatever it takes to underpin the market and to support the long process of re-balancing." In view of the latest developments, the Paris-based Agency said that stock build trends had been reversed in some cases and there is little sign there will be stock build in three of the four quarters in 2018.

Global oil supply rose 90,000 b/d in September to 97.5 mpbd due to slightly higher non-OPEC output. Levels are now 620,000 b/d higher than in the same month in 2016. OPEC production in September was virtually unchanged at 32.65 mbpd, down 400,000 b/d from a year earlier. The IEA estimated OPEC compliance with output restraints was at an average 86 percent since the production agreement was implemented at the beginning of the year.

"The next few weeks ahead of the (OPEC) producers' meeting in Vienna on 30 November will be crucial in shaping their decision on output. A lot has been achieved towards stabilizing the market, but to build on this success in 2018 will require continued discipline," the IEA remarked.

Meanwhile, the IEA left unchanged its demand growth forecast for 2017, predicting a rise of 1.6 mbpd to reach 97.7 mbpd. In 2018, demand growth is expected to firm 1.4 mbpd to reach 99.1 mbpd.

"For next year, the crude and product markets look broadly balanced, assuming OPEC holds output steady at around current levels," the OMR said. The report indicated that the production restraints and stock draw had helped bolster prices to close to USD 60 bbl, before they settled at around the USD 57 bbl mark for Brent Crude and just above US$ 50 bbl for WTI.

Source: KUNA

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