JMMC reports positive indications of oil market rebalancing in progress

No 38/2017
Vienna, Austria
24 Aug 2017

The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) reported that based on the Report of the Joint OPEC-Non-OPEC Technical Committee (JTC) for the month of July, efforts by OPEC and participating Non-OPEC producing countries have continued to show positive results towards the goal of rebalancing the oil market.

The JMMC was established following OPEC’s 171st Ministerial Conference Decision of 30 November 2016, and the subsequent Declaration of Cooperation made at the joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on 10 December 2016 at which 11 (now 10) non-OPEC oil producing countries cooperated with the 13 (now 14) OPEC Member Countries in a concerted effort to accelerate the stabilization of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day. The resulting Declaration, which came into effect on 1 January 2017, was for six months. The second joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on 25 May 2017, decided to extend the voluntary production adjustments for another nine months commencing 1 July 2017.

As of July 2017, the OPEC and participating non-OPEC producing countries achieved an impressive conformity level of 94 per cent. This is a demonstration of the commitment of participating producing countries to continue their cooperation towards the rebalancing of the market. The JMMC expressed great satisfaction with the results and steady progress made towards full conformity of the production adjustments, and encouraged all participating countries to achieve full conformity, for the benefit of producers and consumers alike. The JMMC also welcomed the participation of the UAE at the recent JTC meeting, where the UAE reiterated its commitment to adhere to its production adjustments for the remaining period of the Declaration of Cooperation.

The JMMC took note of the recent market development and expressed confidence that the oil market is moving in the right direction towards the objectives of the Declaration of Cooperation. In particular, global oil demand growth in 2017 is now better than expected, while for 2018, world oil demand is anticipated to rise further.

Oil commercial stocks fell in July and the latest five-year average has been reduced from the beginning of this year. Supported by the narrowing Contango, floating storage has also been on a declining trend since June.

The JMMC will continue to monitor other factors in the oil market and their influence on the ongoing market rebalancing process. All options, including the possible extension of the Declaration of Cooperation beyond Q118, are left open to ensure that all efforts are made to rebalance the market for the benefit of all.

The JMMC also expressed its intention to invite Libya and Nigeria to attend the next meetings of the JTC and/or the JMMC.

The next JMMC Meeting is scheduled to be held in Vienna, on 22 September 2017.