Abu Dhabi: The UAE Minister of Energy on Tuesday voiced optimism that as long as the agreement [to cut output by 1.8 million barrels per day (bpd) for the first half of 2017] stands, the market will be heading towards rebalancing.
Suhail Al Mazroui said that there has been no major volatility in the market. “We have seen it at $55 or $56 and lower. Compared to other periods this fluctuation is minor. The second half [of this year] will see more demand and will witness more upward correction,” he told reporters on the sidelines of the Federal National Council session.
About the outlook of the oil prices in the second half of the year, Al Mazroui said the most important thing is how much oil you took off the market.
Oil prices found some support from data showing that Russian oil output fell slightly to 11 million bpd in April, from 11.05 million bpd in March.
“We have an increasing demand in the other half of the year and refineries will conclude maintenance work and start consuming oil and draw from inventories. The danger is not about oversupply in the market.”
The Organisation of the Petroleum Exporting Countries (Opec) and several other key producers including Russia have agreed to cut output by 1.8 million barrels per day (bpd) for the first half of 2017 in an attempt to try and reduce a global glut.
Opec and other producers will meet on May 25 and are widely expected to keep output limits for the rest of the year, but prices have been weighed down by the slow pace of inventory drawdowns, with stockpiles still near record highs.
The minister said he thinks there is logic in continuing the cut “but it’s a consensus decision and not an individual one.”
“If we were to continue the cut we will have to commit to it too. This cut should come from Opec and non-Opec countries as well,” Al Mazroui said.
He noted that no decision has been taken on production cut yet. “This a sovereign decision and no single country can decide.”
Regarding commitment of oil producing countries, Al Mazroui said: “All in all the level of commitment is very high.”
Benchmark Brent crude oil was down 10 cents at $51.42 a barrel by 13:45 GMT. The futures contract hit a one-month low of $50.45 last week after the restart of two Libyan oilfields.
Libya’s National Oil Company said on Monday production had risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
