OPEC chief, amid optimistic oil outlook, predicts further decline in stocks in coming months

OPEC and its allies expect oil stocks to continue falling in the coming months, the OPEC secretary general said on Monday, suggesting that producers’ efforts to support the market are bearing fruit.

Oil stocks in developed countries fell 6.9 million barrels in April, Mohammad Barkindo said in a virtual appearance at Nigeria International Petroleum Summit, 160 million barrels lower than in same period a year ago, making the figure public for the first time.

“We expect to see further levies in the coming months,” he said.

The Organization of the Petroleum Exporting Countries and its allies – known as OPEC + – decided in April to put 2.1 million barrels per day (bpd) back on the market from May to July. Producers stuck to the move at a meeting last week, triggering a rise in oil prices.

“The market has continued to respond positively to the decisions we have taken, including upward adjustments in production levels from May of this year,” he said.

While he noted that the vaccine rollout and “massive fiscal stimulus” have contributed to an optimistic outlook, he said the uneven availability of vaccines around the world, high inflation and continued COVID-outbreaks. 19 posed continuing risks to oil demand.

OPEC + complied with 114% of production restrictions agreed in April, Barkindo said.

The group cut production to a record 9.7 million bpd last year as demand plummeted when the COVID-19 pandemic first struck. From July, the curbs still in place will amount to 5.8 million bpd.

At a subsequent roundtable at the conference, he added that while OPEC has not denied climate change, the global economy still needs oil.

“We encourage all our member countries to continue investing in renewable energies but also to continue to meet the demand for hydrocarbons,” he said.

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