OPEC ministers gathering in Vienna for the group’s biannual meeting said the oil market is moving in the right direction, as a supply glut appears to be dissipating.
“From the beginning of the year until now, the market has been correcting itself upward,” UAE Oil Minister Suhail al Mazrouei told reporters in Vienna. “The market will fix itself to a price that is fair to the consumers and to the producers.”
Those comments, echoed by his Nigerian counterpart, suggest renewed optimism among producers after oil prices rose more than 85% in New York since touching a 12-year low in February, Bloomberg reported.
There are still signs of division in the group, with Venezuelan Energy Minister Eulogio Del Pino saying on Wednesday the price recovery had more to do with unexpected supply disruptions than a successful OPEC strategy.
While Del Pino lamented the failure of the freeze agreement, which Saudi Arabia blocked because Iran refused to participate, he said unplanned disruptions in Canada, Nigeria and Kuwait had effectively capped crude production.
“If you take into account what happened in the last three or four months,” there has been a “de facto” freeze, Del Pino told reporters in Vienna on Wednesday. "More than 3 million barrels of daily production are out of the market."
"I think the market trends are better now” and the sense of urgency that spurred producers to mull an agreement to freeze production in April has dissipated, Emmanuel Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, told reporters in Vienna.
While prices are moving “in the right direction, I think it needs more acceleration of the pace,” he said.
After two and a half years of oversupply, oil traders also see signs supply and demand are getting close to being in balance.
The IEA forecasts oil demand will increase this year by 1.2 million barrels a day, while Dunand said growth is likely to top 1.5 million, perhaps rising as high as 1.8 million.
