The fall in oil prices that began on March 7 in response to news of high US inventories has not recovered as US inventories continued on their upward trajectory. Brent prices hovered around $ 51, higher than the low of $ 47 they had reached in mid-March; WTI remained around $ 47.
To boost market confidence, Saudi energy minister, Khalid al Falih, said on 17 March that OPEC and its associates could extend their agreement to cut production beyond 30 June if the global inventory situation continued to be excessive. Again, though there are reports that some OPEC and non-OPEC members have not been fully complying with their production cut commitments, al Falih said he believed “in the sincerity of their effort”. He also said he had warned US shale oil producers that, if they with their excessive production of 3-4 years ago, the global market would not absorb it. OPEC will take a view on continuing production cuts at its meeting in Vienna on 25 May.
The Dammam-based Arabian Petroleum Investment Company (Apicorp), that is owned by the ten Arab oil producers, has said that even with the existing cuts oil prices will not go above $ 60 this year on account of the high inventories built up by consumers and the increasing shale oil production.
April 3, 2017