Kuwait oil minister sees balanced oil market toward end 2019

Mon, 2019-05-27 22:46

DUBAI: The oil market is expected to be in balance toward the
end of 2019, as global inventories fall and demand remains strong,
but OPEC’s job is not done yet, Kuwait’s oil minister told
There are still uncertainties around oil demand growth due to
concerns about the impact of the US/China trade dispute on global
economy, while US shale oil production is still rising, Khaled
Al-Fadhel said on Monday.
This uncertain outlook is making it tough for OPEC and its allies
to have a clear oil supply plan for the second half of the year.
Fadhel said it was too early to say now if the oil producers will
extend their current output targets after June.
The Organization of the Petroleum Exporting Countries (OPEC),
Russia and other non-OPEC producers, known as OPEC+, agreed to
reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for
six months, a deal designed to stop inventories building up and
weakening prices.
“There is great anxiety in the market today mainly related to
supply concerns. For example, the impact of the USgovernment
decision announced recently not to extend the waivers to major
buyers of Iranian crude has yet to be felt,” Fadhel said in
written answers to questions from Reuters.
He also cited the possibility of further US sanctions on Venezuela,
political tensions in Libya, US shale oil production growth and
trade dispute between Washington and Beijing as reasons why the
global supply and demand outlook remains unclear.
“If we are to look at the OECD commercial inventories, I think we
are on the right track. OECD Inventories are falling toward the
last 5 year average, and the record level of conformity reached in
April by OPEC and its non-OPEC partners have played a significant
role,” he said.
Oil producers’ compliance with the supply-reduction agreement was
168% in April.
“But we still have some more work to do. I believe the market is
expected to be balanced during the 2nd half of 2019, more toward
the end of the year.”
Seasonal oil demand growth is expected to be strong in the next few
months as refineries globally come out of maintenance, but there is
still uncertainty on the demand side, he said.
OPEC’s share of the agreed cuts is 800,000 bpd, but its actual
reduction is larger due to production losses in Iran and Venezuela.
Both are under US sanctions and exempt from the voluntary
reductions under the OPEC-led deal.
That shows that OPEC+ producers are cutting output by more than
their share. Saudi Arabia has been pumping below its production
target since January to keep oil inventories and prices in
US President Donald Trump has called on OPEC and the group’s de
facto leader Saudi Arabia to boost output and lower oil prices.
Russia also wants to increase supply after June when the OPEC+ pact
is due to expire, but Riyadh fears a crash in oil prices and a
build-up in inventories.
Asked whether an increase in oil supply is a possibility in the
second half of the year, Fadhel said: “All options are on the
table. It is not an unlikely scenario.”
“You surely recall June 2018, what OPEC and its allies did last
year when they decided to lower conformity level from 152% to reach
100% by increasing crude production when there was a growing
perception of supply shortages back then,” he said.
A long-term cooperation agreement between OPEC, Russia and other
non-OPEC producers will be on the agenda at the OPEC+ meeting in
June, the Kuwaiti minister said. (Editing by Jane Merriman)

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Kuwait oil minister sees balanced oil market toward end 2019