Global oil inventories shrinking despite US output jump - Mr Novak

Image Source: steelguru.com

Reuters cited Russian Energy Minister Mr Alexander Novak as saying that blobal oil stockpiles, the benchmark for a global supply pact, have been on the decline despite a production boost in the United States. The Organization of the Petroleum Exporting Countries and other large oil producers, led by Russia, have agreed to cut their combined oil output by about 1.8 million barrels per day (bpd) to reduce bloated inventories and prop up oil prices.

Brent crude reached a three-year peak at more than $70 a barrel thanks to the efforts to restore market balance. It has since fallen to about $62 as the United States, which is not part of the supply pact, has boosted shale oil output. C-OUT-T-EIA

Mr Novak said after a speech at a committee of the Russian Federation Council, the upper house of parliament “We are looking at the situation as a whole (and) see that the stockpiles have been shrinking anyway. The shale oil increase does not cover both the demand rise and production decrease.”

The US Energy Information Administration said that it expects domestic crude oil production to rise by more than previously expected this year.

The agency forecast that US crude oil output will rise by 1.26 million bpd to 10.59 million bpd in 2018. For 2019, it raised the production growth forecast slightly to an increase of 590,000 bpd to 11.18 million bpd, surpassing Russia as the world’s largest oil producer.

Mr Novak said that the average oil price for this year is expected to be “close to USD 60”.

Source : Reuters