He noted that until recently, oil prices have moved lower as mild winter weather and ample OPEC supply of close to 30 mb/d over the last three months of the year have allowed current supply to not only meet demand but also produce a contra-seasonal build in commercial crude oil stocks to levels at or above the 5 year average. He said these efforts have resulted in a substantial moderation in crude oil prices, with WTI dropping from $56.42 per barrel on 22 October to around $43 per barrel for much of December, while Brent prices have moved down from $52.03 per barrel to about $40 per barrel in the same period. The OPEC Reference Basket remained close to $35 per barrel for most of December, while many of OPEC’s typically heavy crudes stood lower.

However, since the start of this month, oil prices have seen steady gains, especially for WTI and Brent. Dr Shihab-Eldin attributed this recent increase to seasonal market characteristics, such as the shift towards colder weather in the northern hemisphere and a related decline in US crude and heating oil inventories. Supply disruptions in the North Sea, Gulf of Mexico, Nigeria and Iraq have also played a role, he said.

Despite concerns and prevailing winter market conditions, global oil supply — particularly OPEC output — remains strong and more than adequate to meet expected demand, Dr Shihab-Eldin said, adding that commercial crude oil and product stocks typically experienced draws at this time of year, due to the rise in demand in the northern hemisphere for heating fuels during winter.

He stressed that the current situation requires close monitoring and analysis, and will be examined and deliberated on carefully at the two scheduled Meetings of the Conference on 30 January and 16 March. At these meetings, OPEC Ministers will decide what measures should be taken to prepare for the second quarter when demand typically declines, Dr Shihab-Eldin explained. He reiterated OPEC’s commitment to ensure adequate supplies and said that the Organization stands ready to take the necessary decisions to maintain market stability.