MW: OPEC calls on non-cartel producers to stick to output pledge
OPEC warned Wednesday that it would need non-OPEC producers to act on the pledge to join an output reduction if a global oil glut is to disappear though markets could rebalance as early as the second quarter if both sides keep their promises.
The Organization of the Petroleum Exporting Countries over the weekend reached an agreement with producers outside the group to jointly reduce global oil supplies by just under 1.8 million barrels a day.
Yet questions have arisen about how much non-OPEC countries such as Russia, which have promised to reduce output by a combined 558,000 barrels a day, will enforce the cuts.
Some oil-market watchers also believe trends in demand might be working against the petroleum cartel. After years of healthy growth fueled by low prices and Asia’s expanding appetite, demand for oil next year could increase at its slowest pace since 2014, some analysts say.
In its first monthly market report since the reduction was agreed, the 13-member group said the “OPEC production adjustment alone wouldn’t be enough to clear the total overhang” of 300 million barrels, or 0.8 million barrels a day, currently in storage. “This clearly emphasizes the importance of non-OPEC producers’ contribution to the production adjustment in support of market rebalancing.”
