(MENAFN- Kuwait News Agency (KUNA)) VIENNA, Nov 30 (KUNA) -- Oil producers' decision to extend the production cut agreement is currently on the right track according to recent oil market indicators, a senior Saudi official affirmed Thursday.
"As a result of our joint efforts, the goals laid down in the Declaration of Cooperation are on track to be achieved," Saudi Minister of Energy, Industry, and Mineral Resources Khaled Al-Faleh said while addressing participants of the 173rd OPEC meeting in Vienna.
"When we last met in May, it was apparent that more work needed to be done, which resulted in the 'Declaration of Cooperation' being extended for another nine months," said Al-Faleh, also President of the OPEC Conference.
In May, the Organization for Economic Cooperation and Development (OECD) stock overhang was 280 million barrels above the moving five-year average, but it has since fallen by almost 50 percent to 140 million barrels for the month of October, he indicated.
"Crude in floating storage is also down by an estimated 50 million barrels since June, and the drawdown applies broadly to all regions, including both crude and products. In fact, products are already at their five-year average," said Al-Faleh.
This gratifying outcome has resulted primarily from a near 100 percent compliance to the production targets by the combined OPEC 12, he said, noting that OPEC's credibility has also been enhanced, and all producers have benefitted from this improving situation.
"While recognizing some very major achievements we have made to date, we also need to acknowledge that we have only recently passed the halfway mark on the journey towards achieving the five-year average of OECD stock levels," said the Saudi minister.
Over recent months, demand numbers have been revised upwards on a regular basis, with growth now standing above 1.5 million barrels a day for both 2017 and 2018, Al-Faleh noted.
He said that such a growth is good news, noting, however, that reaching the intended mark will entail some very hard work.
"To achieve our goals on a sustainable basis, we must stay the course, with each member country taking full responsibility for its own contributions and not relying on others. That's the only way to succeed," said Al-Faleh.
He also stressed the importance of focusing on the short-term challenges and looking ahead in terms of OPEC and the industry's future, adding that maintaining unity within OPEC is also essential for succeeding in moving forward.
In December 2016, OPEC and other major producers decided to lower production by 8.1 million barrels per day to counter the low global oil price.
The deal helped the oil price to climb up to USD 60 per barrel after it was barely USD 50 pb.
Economic experts say that deepening the production cut by 550,000 bpd will decrease global reserves by 153 million bpd in the first quarter of 2018.
However, even if the price reached between USD 60 to 70 pb, it is very important to factor in the American and Chinese intentions to upscale operations by next year.
The increasing demand for oil will also have an impact on the market. (Pick up previous) amq.ma
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