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The United Arab Emirates cut daily crude oil production by nearly 200,000 barrels this month, in keeping with the country’s obligations under the OPEC market rebalancing agreement. The size of the cut came partly on the back of refinery maintenance season, Energy Minister Suhail al-Mazrouei said.
Over the next two months, the UAE will cut another 278,000 bpd, demonstrating its compliance with its quota under the agreement. Abu Dhabi National Oil Company informed its clients yesterday that it will be selling less crude in May. The company said it will be reducing the shipments of the two local grades, Murban and Das, by 7 percent.
Speaking on the sidelines of an industry event in Abu Dhabi, Mazrouei commented that the deal is going well, with supply shrinking, which should improve demand. He noted that the current state of global inventories is a result of maintenance season in the U.S., and after it ends, stockpiles will start going down.
Al-Mazrouei declined to say whether he expected better oil prices in the second half of the year, reiterating the leitmotif of Saudi Arabia: that the purpose of the deal was to rebalance the fundamentals of oil and attract more investments in the industry rather than prop up prices.
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Yesterday, the Ministry of Energy reported that average daily production in 2016 stood at 3.089 million barrels, with the November figure at 3.195 million bpd. OPEC members agreed to take as base line their November output, so this is the amount that the UAE is weighing current cuts against, with Al-Mazrouei saying yesterday that the country will exceed its quota by between 15 and 33 percent over the six-month duration of the deal.
The combined amount that OPEC members have committed to take off the global markets is 1.2 million bpd, in addition to which 11 non-OPEC members have pledged to cut another 600,000 bpd.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.