Opec, non-Opec — time to grasp the nettle

Opec and the IEA last week concurred that OECD commercial stocks are closing in on the five-year moving average adopted as a proxy for market balance by participants in the Opec and non-Opec output restraint deal.

The magic number may be hit in May, the IEA said. The timing of the market reports just days ahead of this week’s joint ministerial monitoring committee (JMMC) meeting in Jeddah, and the tentative May date just a few short weeks ahead of the full ministerial meeting in Vienna, puts cutting countries on the spot.

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Hard exit, soft exit

Hard Brexit, Soft Brexit, fudged Brexit – the UK population daily endures the obfuscations and mutual denunciations of a political class unable or unwilling to formulate an exit strategy from the EU. And the mode of exit – crashing out or conscious uncoupling — may well determine the economic impact of the divorce.

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November’s Vienna meet may be Opec, non-Opec lite

The November Opec and non-Opec gathering in Vienna looks set for a downgrade.

After the compliance meeting on 22 September, Russian oil minister Alexander Novak said the likely state of the market in April wouldnot be discernible until early 2018. Yesterday, he was explicit: “We need to take a decision in the first quarter of 2018. In November we will certainly discuss the market situation and prospects, but it makes no sense to take a decision.”

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Somewhere, over the rainbow

Presenting BP’s Statistical Review of 2016 today, chief executive Bob Dudley said: “The oil market returned broadly back into balance by mid-year, but prices continued to be depressed by the large overhang of built-up inventories.”

Dudley’s definition of balance here is a straightforward matching of production and demand. Opec and its partners in output cuts prefer to factor in the inventories that are weighing on prices. And weighing they are. Brent has failed to break above the mid-$50s/bl, despite a disciplined cuts programme that has been in place since the start of this year, and has found itself most comfortable at well below $50/bl — below year-earlier levels — since last month’s agreement to extend the cuts.

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