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OPEC and its partners might consider deepening the crude oil production cuts they agreed to extend to the end of March 2018, Saudi Energy Minister Khalid al-Falih told Russia’s TASS news agency in an interview. However, Al-Falih added that it is too early to discuss deeper cuts now as the current rate of cuts is working and the effects will become apparent by the end of next month.
“Nothing is off the table but today nothing is on the table either. We made a deal,” the minister said, adding that if all participants in the deal stick to their quota and the world economy continues to improve, the oil market will return to balance soon. He noted that compliance in April had exceeded 100% and said he hoped the figures for May were even better.
Shipping data tracked by Reuters revealed that in May OPEC shipped 24.3 million bpd around the world, down by half a million bpd from April and considerably lower than the five month average to May, which stood at 25.1 million bpd.
Still, prices are slipping down as traders remain skeptical of OPEC’s and its partners’ ability to restore balance in demand and supply while U.S. producers continue to ramp up production. In fact, Brent crude, the international benchmark, slid below US$50 a barrel today in Asian trade, indicating that no amount of assurances from OPEC or Russia could push prices up unless they are supported by hard evidence.
Meanwhile, U.S. crude oil production has gained 10 percent over the last year, to 9.34 million barrels and the number of drilling rigs has been rising for the last 20 weeks – a record streak of additions. At the end of last week, there were 733 active rigs in the U.S. oil patch, the highest number since April 2015.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.