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OPEC's Barkindo believes stocks drawdown to rebalance market

20 January 2017 [13:00] - TODAY.AZ

By Azernews


By Nigar Abbasova

Oil prices edged up on January 20 amid expectations of tighter supply, reports of record Chinese demand, as well as a drop in dollar rate. But, still the prices remained pressured due to rising number of U.S. inventories.

Brent crude, the international benchmark, was 0.46 percent up and stood at $54.41 a barrel, while U.S. West Texas Intermediate (WTI) futures were trading 0.33 percents up at $52.29 per barrel, Reuters reported.  

Main comments that hit the headlines and triggered an increase in prices came from OPEC Secretary General Mohammed Barkindo, who said the stocks drawdown would help rebalance the market and establish the "equilibrium oil price".

“The primary goal is to accelerate the stocks drawdown. We are already seeing stocks coming down from the high levels

Oil stocks around the world need to decline by at least another 270 million barrels to reach a five-year industry average for OPEC to be able to say the markets are becoming balanced,” he told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.

Earlier Barkindo stated that OPEC and non-OPEC producers agreed to establish a joint ministerial monitoring committee and a Vienna meeting would adopt an oversight and compliance mechanism. The Cartel will meet in May when it will decide whether to propose to extend the output cutting measures together with non-member countries.

Meanwhile, in its monthly oil market report, the IEA said output cuts announced by OPEC and 11 non-cartel producers in November had "entered their probation period", mentioning that the market is waiting the outcome of the output deal.

The agency also provided a positive data showing a drop in commercial oil inventories in the major industrialized countries for a fourth consecutive month in November, with another decline projected for December. This year the agency expects world oil demand growth of around 1.3 million bpd.

Also, China's December refinery operations were up 3.7 percent at 47.82 million tons, or 11.26 million barrels per day (bpd), reaching a new daily record. The growth in demand in the world’s second-largest economy is forecasted to continue further this year.  China National Petroleum Corp (CNPC) earlier said the country's net crude imports will rise 5.3 percent to 396 million tons in 2017, with crude consumption headed for a record 594 million tons or 12 million bpd this year.

The dollar index – one of the main factors influencing dynamics in crude pricing was among the supportive signs for the market. The greenback index dropped ahead of U.S. President-elect Donald Trump's inauguration, falling 0.2 percent. Analysts say the rate of the index depends heavily on Trump’s rhetoric in his inauguration speech, expecting more details on his policies.

URL: http://www.today.az/news/business/157896.html

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