Once more, the Organization of the Petroleum Exporting Countries (OPEC) has contradicted statements made by its members, this time negating an earlier claim from Saudi Arabia that it welcomed more US shale production: Mohammed Barkindo, secretary-general for OPEC, now says he wants the U.S.to participate in the cartel's crude cutback initiatives.
Oil futures fell more than 2 per cent on Friday, ending Brent crude's longest multi-week rally in 16 months as oversupply concerns reappeared as producers have started hedging future drilling. "In an alternative scenario, sustained weakness below $49, which is also under the 50 (day) daily simple moving average, may open a path towards $47.80".
Opec and 10 non-Opec oil producers pledged to collectively cut production to the tune of 1.8 million barrels per day (bpd) via an initiative fronted by Saudi Arabia and Russian Federation in May 2017.
Ahmad said that Saudi Arabia was making no secret of letting the world know about its underlying commitment to help re-balance the oil markets.
The worst-case scenario, of more than 1 million b/d of Iranian crude exports being removed from the market due to renewed U.S. sanctions, is now not the base case for the oil market, but nonetheless a cause for some concern around supply. Overall crude stocks "are still high", he added, and OPEC needed to stick to its output curbs. About 1.49 million b/d or 85% of the offshore oil output was shut as of Monday morning local time, compared with 1.62 million b/d Sunday, according to the US Bureau of Safety and Environmental Enforcement. However, many facilities have begun resuming operations.
Saudi Arabia has the added interest of wanting to keep crude prices high ahead of a public listing of five percent of shares in its giant Saudi Aramco oil firm, which is set to take place next year.
Looking into oil supply and demand balances in 2018, the IEA said that it saw that "three quarters out of four will be roughly balanced - again using an assumption of unchanged OPEC production, and based on normal weather conditions".
OPEC supply was little changed in September at 32.65 million bpd, but down 400,000 bpd from a year earlier, meaning the group's compliance with its self-imposed 1.2-million bpd output cut stood at 88 percent last month and 86 percent for the year to date, the IEA said.