Room for non-Opec countries to cut output further, says Dr. Al Rumhy
February 15, 2017 | 7:31 PM
by Reuters
Rumhy described overall compliance with the agreement as okay in January and expects it to be better this month. - Times file picture

Kuwait: Oman's oil minister said on Wednesday there is room for non-Opec countries to cut output further as part of a supply deal agreement with Opec producers.

"Their numbers came as such because time was tight," Mohammad bin Hamad Al Rumhy told reporters in Kuwait.

The minister later said: "Russia told us since the beginning the cut will take some time."

He added he expects Russia’s compliance with the agreement to be better in February and March.

Rumhy described overall compliance with the agreement as okay in January and expects it to be better this month.

Meanwhile, Oil slipped further below $56 a barrel on Wednesday as an industry report showing a large rise in US crude inventories signalled ample supply, even as Opec achieves record compliance with its supply-cut accord.

US inventories rose by a larger-than-expected 9.9 million barrels last week, the American Petroleum Institute (API) trade group said on Tuesday, ahead of the Energy Information Administration's (EIA) official supply report.

"The inventory trend in the US raises doubts about whether the Opec production cuts have actually resulted already in a tighter supply situation," said Carsten Fritsch, analyst at Commerzbank.

Brent crude was down 35 cents at $55.62 by 1328 GMT, half its level of mid-2014, when a global glut started a collapse in prices. US crude fell 36 cents to $52.84.

To support prices, the Organisation of the Petroleum Exporting Countries and other producers including Russia are cutting output by almost 1.8 million barrels per day in the first half of 2017.

Although Opec has made a strong start in complying with the cuts, rising US stocks and a revival of US oil output have limited the price rise.

Analysts expect US crude inventories to have risen by 3.5 million barrels, the sixth straight week of gains, in the EIA report scheduled to be released at 1530 GMT.

"Should this figure be confirmed by the EIA later today, US crude stocks will have risen to a fresh record high," said Stephen Brennock of oil broker PVM, referring to the API's report.

Opec in January delivered record compliance of over 90 per cent with its output curbs, according to estimates from the International Energy Agency and figures collected by OPEC's headquarters.

Within Opec, adherence is mixed. Top exporter Saudi Arabia, keen to make the deal work, said it cut output by more than the amount called for by the agreement.

BMI Research, in a report, said a compliance rate of just 40 per cent by Iraq, Opec's second-biggest producer, "could prove problematic to group cohesion."

Russia and the other non-Opec producers have so far delivered smaller cutbacks. -Reuters

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