A deal among oil-producing countries to curb production and balance an oversupplied market will achieve its objective in the first quarter of next year, Russian Energy Minister Alexander Novak said, after prices tumbled on news of a build-up in US inventories.
His counterpart from OPEC’s biggest producer Saudi Arabia said inventories were declining at a global level and that reductions in stockpiles would accelerate in the next three to four months, Bloomberg reported.
Short-term variations will not affect this long-term supply trend, Saudi Energy Minister Khalid al-Falih said at a joint news briefing in Astana, Kazakhstan, on Sunday.
The Organization of Petroleum Exporting Countries and other crude producers including Russia agreed on May 25 to extend the supply deal, which they reached last year, until the end of the first quarter of 2018.
Prices slumped on the news that they would not cut any deeper, and US crude futures fell 5% on June 7 as the nation’s stockpiles unexpectedly grew. International benchmark Brent crude closed at $48.15 a barrel on Friday.
“The agreement is working and global crude inventories are falling gradually,” Novak said at the same event in Astana. Demand will recover in the first quarter, reducing stockpiles, and Russia is committed to doing everything to balance the market, he said.
US inventories of crude and oil products in the week ended June 2 surged by the most since 2008, Energy Information Administration data showed on June 7, after the world’s largest oil consumer boosted imports and trimmed exports.
The number of drilling rigs in the US rose by 8 to 741 rigs last week, according to Baker Hughes Inc., as shale producers continue to pump more.
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