Tue. Nov 30th, 2021

OXFORD, England – An OPEC-led supply cut deal is helping to rebalance the global oil market, OPEC’s secretary-general said on Monday, and higher demand in the rest of this year should lead to further reductions in oil inventories.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, are reducing crude output by about 1.8 million barrels per day until next March in a bid to reduce inventories and support prices.

“It is clear the rebalancing process is under way, supported by the high conformity levels of OPEC member countries and participating non OPEC countries,” Mohammad Barkindo in a speech.

Barkindo was in Oxford to attend an energy seminar. Oil inventories are coming down onshore, and oil held in floating storage has been declining since June, he said.

As well as the supply cut, a rise in demand of close to 2 million barrels a day in the second half of the year relative to the first will help get rid of excess oil in storage.

“This boost in demand will contribute to further reductions in commercial inventories,” Barkindo said. Ministers are now discussing extending the supply cut for at least three more months beyond March, before OPEC meets again in November.

The supply cut helped boost crude prices above $58 a barrel in January, but prices have since slipped back to around $54 as the effort to clear a supply glut has taken longer than expected.

Reporting by Alex Lawler; Editing by Larry King; Reuters