Barely a few hours after the Joint OPEC-Non-OPEC Ministerial Monitoring Committee, JMMC, met in St. Petersburg, Russia, for its fourth meeting on July 24, 2017, to review last month’s report as well as the first six months of the Declaration of Cooperation as submitted by the Joint OPEC-Non-OPEC Technical Committee, JTC, crude oil price has risen from $48 to $50 per barrel.
The leap in price was also fuelled by the vandalism of the Trans Niger Pipeline, which affected the export of about 225,000 barrels per day, bpd in Nigeria. Investigations showed that speculation was rife that the two developments were capable of withdrawing excess oil from the volatile market.
Specifically, the price of Brent, usually used to benchmark other oil prices rose from $48 to $50 per barrel, yesterday.
The prices of WTI rose from $47 to $48 per barrel, while that of OPEC basket dropped from $46.99 to $46.01 a barrel. OPEC stated in a statement that “the price of OPEC basket of14 crudes stood at $46.01 a barrel on Monday, compared with $46.99 the previous Friday, according to OPEC Secretariat calculations.
However, the latest price showed $6 per barrel in excess of Nigeria’s $44 per barrel 2017 budget reference price. According to OPEC, the meeting was graciously hosted by the Russian Federation, and the Committee expressed its deep appreciation to HE Alexander Novak, Minister of Energy, for the warm hospitality and excellent arrangements extended to all delegations.
It stated that the Committee reviewed the JTC report and noted that the oil market is making steady and significant progress towards rebalancing.
OPEC disclosed that this assertion is based on the Report of the JTC for the month of June 2017, which reviewed market developments and the results of the first six months of progress made according to OPEC’s 171st Ministerial Conference Decision and the respective voluntary adjustments in line with the Declaration of Cooperation.
“The continued strengthening of the global recovery is underway, with stability in the oil market remaining a key determinant. The market volatility has been lower in recent weeks and investment flows have visibly started to improve in the industry. “According to the JTC report, there are several positive indicators going forward.
Oil demand is expected to increase significantly in the 2H17 compared to 1H17, with the growth reaching a level of 2 mb/d, which should sustain the inventory draws. “Furthermore, the participating OPEC and Non-OPEC producing countries achieved a conformity level of 98% in June 2017.
In addition, same level of high conformity was observed for the first six months of January to June 2017. Between January and June 2017, the participating producing countries adjusted their production downwards by an estimated volume of 351 mb.
“Also, the overhang of OECD commercial oil stocks over the 5-year average level has fallen by 90 mb for the period from January to June 2017 and now stand at 250 mb.
The JMMC noted that despite the high level of conformity at the aggregate level, there is still room for improvement by some participating producing countries, and demanded that all participating producing countries must promptly reach full conformity.
Consequently, the JMMC had serious discussions with those countries and will continue to engage with all participating countries individually, in particular those that are yet to achieve 100% conformity for the remaining period of the Declaration of Cooperation.