Kuwait Oil Minister: No Plan to Exit Oil Cuts

Gladys Abbott
January 19, 2018

They include unprecedented high conformity levels among the 24 participating nations in terms of the production adjustments, strong oil demand growth, and slower than anticipated growth in US tight oil supply.Barkindo said: "It is worth emphasizing the global importance and impact of the various historic decisions reached in 2016 that have led to the improving market conditions of today."The broad consensus is that the market would be in a much more hard situation without the "Declaration of Cooperation". Yet, with increasing oil prices, some investors are "skittish that activity levels are going to ramp up and supply growth is going to accelerate". So it remains to be seen if the London-based oil contract has indeed topped out.

Brent has risen from $61 a barrel in early December and some analysts say the rally may be about to run out of steam.

It expected Brent to rise to around $75 per barrel by the third quarter of this year.

"This rally has been driven first by robust fundamentals, with strong demand growth and high OPEC compliance accelerating", USA bank Goldman Sachs said in a note on Tuesday.

Bloomberg said pressure is rising on OPEC to develop a long-term output plan as the oil cartel and Russian Federation try to plot a way out of their production cuts.

Despite this, traders said prices were unlikely to fall far due to risks to supply disruptions.

"A sudden abandonment of production limits and an increase of some 1.5 million barrels per day, previously cut, might not cause a sharp price slump this year, but would definitely do so in 2019".

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The agency previously said US output could reach 10 million bpd in February and 11 million bpd in 2019. Distillate production averaged 5.1 million barrels a day last week, down about 200,000 barrels a day compared to the prior week's production.

The oil producers will officially review their agreement in June and may start to cut quotas in the second half of the year.

After falling the previous week due to cold weather, US crude production rose to 9.75 million barrels per day last week.

With plenty of surplus oil still around, ministers from the United Arab Emirates, Iraq and Kuwait insist there's no need to change strategy and the cartel will stick with its plan to restrain production for the rest of the year.

USA crude inventories declined 6.86 million barrels last week to the lowest level since February 2015, the Energy Information Administration said.

Expected growth in total US crude supply was revised higher by 110,000 barrels a day to 820,000 a day, led by conventional production, according to the Organization of Petroleum Exporting Countries report.

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