OB 03_04.2017
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C o n f e r e n c e N o t e s

per cent. They then moved higher to reach 921,000

contracts on February 21, an additional rise of 21 per


“I have to underline that fundamentals in the oil

market today would have been much different without

these decisions that have now effectively been put into


However, Barkindo noted that despite the expecta-

tion of improved levels of conformity in February, which

had proven to be true, themarket’s sentiment had turned,

with the combined number of WTI and Brent net-long

positions falling to 695,000 by March 14. This was a drop

of 25 per cent since February 21.

“It is important to note that this softening of the

market is not totally unexpected,” he explained. “Firstly,

we are in a seasonally low-demand period. Secondly,

another seasonal trend is the shut-in of refinery through-

put in the US. In January and February, 1mb/d of through-

put was shut down for maintenance. For these two

months, this equates to approximately 60m b.”

Rising non-OPEC production

Thirdly, said Barkindo, “in addition to these seasonal

trends, in recent months we have also seen rising pro-

duction from a number of non-OPEC nations, particularly

in the US from tight oil.

“Moreover, we are seeing expectations for much

greater quantities to come from non-OPEC in 2017, as

reported by all major reporting agencies since the start

of this year.

For example, he said, in the January 2017 OPEC

Monthly Oil Market Report,

non-OPEC supply was pro-

jected to grow by 120,000 b/d in 2017. In the March

report, this number had risen to 400,000 b/d, driven

mainly by estimations for rising growth in the US, as well

as in Canada and Brazil.

“And fourthly, we also need to recognize that the

fourth quarter of 2016 was a period of significantly

rising supplies. Non-OPEC increased its production by

around 1.8m b/d from September to November 2016

and, over the same period, OPEC increased its produc-

tion by about 500,000 b/d. This combined 2.3m b/d

expansion needs to be set against a global demand

increase of just 200,000 b/d in the fourth quarter of


“This supply growth is now working its way through

the system. It will take time for the market to fully

absorb,” he asserted.

The OPEC Secretary General pointed out that these

developments had translated into stock levels remaining

persistently high.

The OECD stock overhang was currently at 282m b

above the five-year average and, in the US, crude stocks

had reached a historical high of 533m b that was mainly

attributed, as mentioned, to lower refinery throughput

OPEC bulletin 3–4/17

OPEC officials and press attending the JMMC in Kuwait.