Opec, non-Opec states defer extension on cuts; Oil price slides
Opec and non-Opec oil producers agreed to review whether a deal to throttle supply should be given a six month extension.
In a statement released on Sunday, the Joint Ministerial Monitoring Committee (JMMC) said expressed its satisfaction with the progress made towards full conformity with voluntary production cuts and encouraged all participating countries to “press on towards 100% conformity”.
Lack of an immediate extension sent crude prices retreating on Monday, with West Texas Intermediate down 0.8% to $47.60 a barrel and Brent crude was off 0.5% to $50.54.
Yet OPEC argued that with the end of the refinery maintenance season and the recent slowdown in the US stock-build, as well as the reduction in floating storage, there remained support for its efforts to control output and support prices.
JNCC chair, Kuwait oil minister Issam Almarzooq, said “more has to be done”.
“We need to see conformity across the board. We assured ourselves – and the world – that we would reach our adjustment to 100% conformity,” he said in a speech at the two day meeting.
“Our voluntary adjustment is and will remain 100 per cent, and although this should be seen as a collective effort, individual countries also need to take their conformity very seriously. If we reach our common objective, we could see balance returning to the market by the third quarter of 2017. If not, this date may be pushed further out."
However, the ability of US shale producers to offset Opec's cuts has made efforts to reduce inventory somewhat elusive, said analyst Michael Hewson at CMC Markets.
"This flexibility on the part of US shale producers could well see crude prices fall further, particularly since oil markets have been geared to a move higher for the last few weeks," he said.