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10

OPEC bulletin 3–4/17

C o n f e r e n c e N o t e s

2

n d

M e e t i n g o f t h e J o i n t M i n i s t e r i a l M o n i t o r i n g C o m m i t t e e

coupled with increasing US production in a seasonally

low-demand period.

“However, outside the US, the global trend of

destocking has been broadly on track.”

Barkindo noted that, in recent months, he had spo-

ken to many financial market players active in the oil mar-

ket, at events in both London and Houston.

He said it was evident there was a significant level

of bullishness in the first two months of this year, with a

general recognition that the rebalancing was occurring.

But this was tempered somewhat by questions about the

months ahead.

“This included questions, such as: when can we

expect to see a strong and declining trend in stock lev-

els, particularly in the US? What can OPEC and non-OPEC

nations participating in last year’s decisions achieve in

the first half of 2017? And what might happen in the sec-

ond half of 2017?

“These are questions to focus the minds of this

Committee. Moreover, we need to remember the role that

these financial actors play in the oil market today. They

play a major function, possibly a significant and deter-

mining factor, in the value of the oil sold daily.”

Barkindo continued: “To highlight this, we need

to compare the size of the physical and the financial

markets for oil. The size of the physical market today

is 95m b/d, whereas, if we take open interest, includ-

ing all traders, the volume of the financial market for

oil represents more than 60 times that of the actual

physical market!”

Turning to the OPEC/non-OPEC production adjust-

ments, he reported that conformity levels in January

and February had been better than market expecta-

tions, but further advancements could, and needed

to be made.

“It is vital that we see the full commitment of each

and every participating country. We expect 100 per cent

conformity,” he stressed.

“This will be vital to help counter the market devel-

opments I have just highlighted and the increasing vol-

atility we have witnessed over the past couple of weeks.

“We still believe that the full and timely implementa-

tion of the decisions taken last year will see destocking

accelerate by the end of the first half of 2017 with posi-

tive upshots and an anticipated balancedmarket towards

the end of the year.

“It is critical we keep our eyes on the goal. We need to

ensure an acceleration of the drawdown of the stock over-

hang and bring the necessarymarket rebalancing forward.

“I cannot think anything to the contrary. We need to

be patient and demonstrate our strong will to allow our

decision to run its course.

“I join the chair and the co-chair in urging all partic-

ipants to meet their obligations under the very guiding

principles of fairness, equity, transparency, and timeli-

ness,” concluded the OPEC Secretary General.

Alexander Novak, Minister of Energy, Russian Federation, talking to the international media.