Opec-led cut not soaking up the excess as quickly as expected
The success of the production cut has yet to show up in the amount of crude being transported by ships, writes Clyde Russell
Launceston — One of the factors behind the recent slump in crude oil prices may be the realisation among market participants that there is a difference between production cuts and export flows. While oil cartel Opec and its allies appear to have been relatively successful in implementing their planned output cuts of 1.8-million barrels a day, this has yet to show up in a meaningful way in the amount of crude oil being transported by ships. The seeming easy availability of crude despite the output cuts helped drive crude prices lower, with Brent dropping as low as $46.64 a barrel on May 5, just above the close of $46.38 on November 29, the day before Opec and its allies announced the deal to trim production and down about 20% since its recent peak in early January. The 11 members of Opec that agreed last November to restrict output by 1.2-million barrels a day for the first six months of 2017 achieved 90% compliance in April, according to a Reuters survey. Output by the 11 countries ...
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