Sept. 28 (UPI) — It’s best to draw out of the OPEC-led effort to balance the market with production cuts during the summer when demand is high, Russia’s energy minister said.
Russia is a member of a committee monitoring the effort to drain the surplus on the five-year average of global crude oil inventories and the largest contributor among parties that aren’t a member of the Organization of Petroleum Exporting Countries.
Russian news agency Tass reported Monday it was told by “a high-ranking source” within OPEC the consensus so far was mixed on extending the arrangement by possibly another six months, which make be the expiration date into September 2018.
Russian Energy Minister Alexander Novak told Austria’s Die Presse newspaper it would be better to consider a shorter extension.
“It’s better to end the agreement during the growing demand period,” he was quoted as saying. “It usually takes place in summer. When the demand will grow, everyone should gradually withdraw from the agreement.”
Demand usually softens during the waning months of the year in part because of smaller drains from the transportation sector, which usually draws most from the energy sector.
Novak in May backed the proposal to extend the terms of the original agreement by three months into March 2018. By July, the minister had already declared the multilateral effort a success. Hundreds of millions of barrels of crude oil are lacking from the global energy market because of the efforts, though investments in the global energy sector are still robust, increasing for the first time since 2014, which he said would “help avoid a potential deficit [in oil and petroleum products] in the future.”
Economists at the Organization of Petroleum Exporting Countries said in their monthly market report for September that total commercial oil stocks for members of the Organization for Economic Cooperation and Development was 195 million barrels above the five-year average and 123 million barrels above the seasonal norm.
Secondary sources reporting to OPEC economists found total OPEC production in August was down about 79,000 barrels per day from the previous month. Production from Saudi Arabia, the largest OPEC producer, remained about the average for the second quarter. Russian oil production is holding steady, but still represents a slight increase from the average last year.
Looking outside OPEC, the minister said U.S. oil production was as strong as expected in recent months, though any data since late August is skewed because of the impacts of hurricanes.