OPEC and non-OPEC producers part of the production cut deal are committed to drawing the global crude oil inventories down to their five-year average, Saudi Energy Minister Khalid al-Falih said on Wednesday after meeting with his Russian counterpart Alexander Novak.
Today's renewed commitment by Saudi Arabia and Russia to do "whatever it takes" failed to boost oil prices, as investors are weighing whether OPEC cuts could address concerns over stubbornly high supply.
As of 7:44am EDT on Wednesday, WTI Crude was down 2.56 percent at US$48.39, while Brent Crude traded down 2.76 percent at US$50.80.
The goal to cut oil inventories down to the industry's five-year average will be reached in the very near future, al-Falih said in Moscow on Wednesday.
"Our joint declaration with Russia concluded that while the rebalancing goal is on its way to being achieved, more needed to be done to draw inventories towards the five-year average," al-Falih noted, as quoted by Reuters.
The Saudi minister went on to add:
"I attended a meeting of the Saudi and Russian leadership at the Kremlin during which both our nations renewed their determination to rebalance the global crude oil market in the interest of greater market stability and restated our commitment to doing whatever it takes to attain those goals."
Both the Saudi and Russian ministers said that their cooperation in oil markets should continue after the OPEC/non-OPEC production cuts period expires in March 2018. Related: Europe Joins Race For Cheaper Batteries With New Gigafactory
The joint actions in cutting oil production have turned a new page in the cooperation between OPEC and non-OPEC countries, Novak said.
It was OPEC's biggest producer Saudi Arabia and the leader of the non-OPEC nations Russia that proposed the cuts to be extended beyond June, until March next year, after seeing that inventories had not been falling as fast as expected. OPEC did indeed agree to extend the cuts for another nine months, but the oil market remained unimpressed with that decision.
Oil prices dropped as much as 5 percent last Thursday as investors had hoped for a stronger signal of commitment such as a longer period of extension or deeper cuts.
By Tsvetana Paraskova for Oilprice.com
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