Opec, allies vow to cut oil output as needed

Dubai - Oil futures drop 7.1% on Tuesday, biggest 1-day drop in more than 3 years

Opec and its allies will not allow a build-up in oil inventories and will cut or adjust production as needed to balance the market, UAE Energy Minister Suhail bin Mohammed Faraj Faris Al Mazrouei said on Wednesday.
Al Mazrouei, who is the current president of Opec, said oil producers would do whatever is required to keep the market stable and keep crude inventory levels where they are.
"Oil production is above expectations, and Opec+ needs to change its strategy," said the Opec chief, adding that oil market fundamentals "are still reasonable" and don't justify the sell-off on Tuesday.
"We have cut in the past to reach the market balance, and if we need to cut production to keep the market balanced, we will," Al Mazrouei was quoted as saying in a television interview.
The UAE minister's statement came amid little signs of an oil market recovery from its unprecedented decline as investors fled a market battered by swelling supplies and a darkening demand outlook. International benchmark Brent crude was up 74¢ a barrel to $66.21 at 1346GMT on Wednesday, having fallen as low as $65.02. US crude was up 58¢ at $56.27.
Futures in New York held losses after plunging 7.1 per cent on Tuesday in the biggest one-day drop in more than three years.
Opec's biggest producer Saudi Arabia has said output needs to be curbed by about one million barrels a day from October levels, and the kingdom plans to pare its exports by 500,000 barrels a day in December. Opec plans to meet next month in Vienna to assess the market.
He said oil producers are not targeting a price but is seeking instead to keep crude inventories in line with their five-year average. He said Opec and allies would need to reduce oil production next year to prevent a build up in supply and there is consensus building among its members to support a decision to balance the market.
"We have seen the risk of an increase in inventories if we didn't do anything and we will not allow that to happen," said Al Mazrouei.
"Obviously there will be a requirement to move from increasing production to reducing production," he said and indicated that the UAE would support any Opec decision to balance the market in December.
Russian energy minister Alexander Novak on Wednesday said no emergency action was warranted to stem the decline in oil prices.
Saudi Energy Minister Khalid Al Falih on Monday said Opec and its allies agreed that technical analysis shows a need to cut oil supply next year by around one million bpd from October levels to balance the market.
A supply cut of up to 1.4 million bpd was one of the options discussed by energy ministers from Saudi Arabia, non-Opec Russia and other nations at a meeting in Abu Dhabi on Sunday.
- issacjohn@khaleejtimes.com