The Organization of Petroleum Exporting Countries said inventory overhang has shrunken to near desired levels, helped by higher demand as well as production cuts by the group’s members.
OPEC’s March production fell by 201,000 barrels per day (bpd) to 32 million bpd, it said quoting secondary sources in its monthly oil report. The figure is below the 32.6 million bpd that OPEC sees as demand for its crude for the whole of 2018.
The largest production drop came from Angola, Venezuela where production was down by 817,000 and 555,000 bpd respectively. Other producers that cut production included Algeria and Saudi Arabia. Meanwhile, UAE increased production by almost 45,000 barrels.
The Organization of the Petroleum Exporting Countries agreed with some non-OPEC members to work towards bringing down a stock overhang to a five-year average by cutting production by 1.8 million barrels per day. The agreement, which came into force at the start of January 2017, will run through 2018.
OPEC said in its monthly report oil stocks in the developed world reversed a rise in January to fall by 17.4 million barrels in February to 2.854 billion barrels, around 43 million barrels above the latest five-year average.
Stock levels are now 207 million barrels below their level in February 2017, with crude stocks in a surplus of 55 million barrels and product stocks in a deficit of 12 million. The overhang has been reduced by 294 million bpd from January 2017.
“Looking forward, a healthy global economic forecast for 2018, positive car sales data in recent months, stronger 2018 yea-on-year U.S. product consumption in January and potentially tighter global product markets are expected to boost gasoline and distillates demand ...,” OPEC said.
“High conformity levels observed by OPEC and non-OPEC producing countries ... should further enhance market stability and support crude and product markets in the months ahead.”
OPEC compliance to production was hit a record of 133 per cent in February.
Meanwhile, it said world oil demand growth for 2017 grew by 30,000 barrels to 1.65 million bpd – total world demand is now pegged at 97.07 million bpd, the report said.
World oil demand growth for 2017 was adjusted higher by around 30,000 bpd to 1.65 million bpd, mainly to account for up-to-date data in both OECD and non-OECD regions.
“Total world oil demand is now pegged at 97.07 million bpd for the year. Similarly, world oil demand growth in 2018 was revised higher by 30,000 bpd, compared to last month’s report, to now stand at 1.63 million bpd.