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10

OPEC bulletin 11/17

D e c l a r a t i o n o f C o o p e r a t i o n

Tangible and concrete results can be seen after many

months of collective effort. Progress is steady and picking

up pace. The process of global destocking is continuing,

both onshore and offshore, with positive developments

in recent months showing a massive drainage of stored

oil across all regions.

At the start of 2017, the OECD stock overhang was at

340m b above the five-year average. This level fell grad-

ually in the first four months of this year to just below

300m b. In the following four months, however, it fell by

a massive 130m b to stand at 170m b above the five-year

average for the month of August.

Crude in floating storage has also fallen by an esti-

mated 40m b since the start of the year. A narrowing

contango since June and the flipping of Brent into clear

backwardation from the second week of September have

provided support. This trend should drain tanks even

quicker by making it unprofitable to continue to store

crude. These strong and positive signs clearly show that

supply and demand fundamentals are gradually but

steadily returning to balance.

The way forward

Several other factors are contributing to the recently gath-

ered pace of rebalancing, including unprecedented high

conformity levels among the 24 participating nations in

terms of the production adjustments, strong oil demand

growth, and slower than anticipated growth in US tight

oil supply.

It is worth emphasizing the global importance and

impact of the various historic decisions reached in 2016

that have led to the improving market conditions of today.

The broad consensus is that the market would be in a

much more difficult situation without the ‘Declaration of

Cooperation’.

The bold actions taken by both OPEC and non-OPEC

oil producing countries address both the medium- and

long-term challenges facing the oil market and help put

it on a road to sustainable stability. The consequences

of the ‘Declaration of Cooperation’ have exceeded even

the most optimistic of predictions.

Commercial oil stocks in the OECD are continuing to

rapidly decline, investment and confidence are coming

back to the industry, and a spirit of collaboration, equity

and transparency pervades OPEC’s expanding relations

with its non-OPEC producing partners.

With a framework of cooperation now developed and

in place, and with the mandate and direction provided

by the ‘Declaration of Cooperation’, producers now have

the tools and the mechanisms to act more quickly and

effectively in the case of future market imbalances —

which history shows are bound to arise again in the oil

industry.

OPEC bulletin 10/17

January February March April

May June July

2017

172

nd

Meeting

of the OPEC

Conference and

2

nd

OPEC and non-

OPEC Ministerial

Meeting

Inaugural Meeting of

the Joint Ministerial

Monitoring Committee

(JMMC)

2

nd

Meeting

of the JMMC

3

rd

Meeting

of the JMMC

4

th

Meeting

of the JMMC

May 25

January 22

February 22

1

st

Meeting of the

Joint Technical

Committee (JTC)

March 17

2

nd

Meeting

of the JTC

April 21

3

rd

Meeting

of the JTC

May 20

4

th

Meeting

of the JTC

June 20

5

th

Meeting

of the JTC

July 22

6

th

Meeting

of the JTC

March 26

May 24

July 24