OPEC chief, in optimistic oil outlook, sees oil stocks falling further

LAGOS, June 7 (Reuters) – OPEC and its allies expect oil stocks to continue to decline in the coming months, the OPEC secretary general said on Monday, suggesting that producers’ efforts to supporting the market are paying off.

Oil stocks in developed countries fell 6.9 million barrels in April, Mohammad Barkindo said in a virtual appearance at the Nigeria International Petroleum Summit, 160 million barrels lower than in the same period a year ago, making the figure public for the first time.

“We expect to see further levies in the coming months,” he said.

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The Organization of the Petroleum Exporting Countries and its allies – known as OPEC + – decided in April to put 2.1 million barrels per day (bpd) back on the market from May to July. Producers stuck to the move at a meeting last week, causing oil prices to rise.

“The market has continued to respond positively to the decisions we have taken, including upward adjustments in production levels from May of this year,” he said.

While noting that the vaccine rollout and “massive fiscal stimulus” have contributed to an optimistic outlook, he said the uneven availability of vaccines around the world, high inflation and continuing outbreaks of COVID-19 constitute continuing risks to oil demand.

OPEC + has complied with 114% of production restrictions agreed in April, Barkindo said.

The group slashed production to a record 9.7 million bpd last year as demand slumped when the COVID-19 pandemic first struck. From July, the curbs still in place will amount to 5.8 million bpd.

In a subsequent roundtable at the conference, he added that while OPEC has not denied climate change, the world economy still needs oil.

“We encourage all our member countries to continue to invest in renewable energies but also to continue to meet the demand for hydrocarbons”, he declared.

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Reporting by Alex Lawler and Libby George; edited by David Evans

Our Standards: Thomson Reuters Trust Principles.

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Felix J. Dixon