Stockpiles in Organisation for Economic Cooperation and Development countries rose to more than 260 million barrels above the five-year average at the end of 2015, he said, adding that the market may start to rebalance this year as demand grows.
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The year also saw two OPEC meetings that failed to decide on production caps for its member countries despite the situation severely affecting the respective state budgets. But Iran and Gulf members of the Opec have been rebuffing Venezuela’s push for a special meeting.
OPEC and non-OPEC oil producers need to work together to tackle a global stocks overhang so oil prices can recover and investments in new fields begin, OPEC Secretary-General Abdullah al-Badri said on Monday.
OPEC officials said on Monday the oil market was poised to start rebalancing itself after prices sank to their lowest since 2003, a sign the exporter group will stick to its policy of not cutting supplies without help from rival producers. The Organization of Petroleum Exporting Countries is targeting high-cost oil producers in an effort to squeeze the most expensive oil out of the market as countries including the US and Russian Federation have boosted output in recent years.
Al-Badri warned the current glut is setting the stage for a future supply shock, with prices lurching from one extreme to another in a deranged market that is in the interests of nobody but speculators. “Today’s oil price is not sustainable”.
Saudi Arabia and Russian Federation, the world’s biggest oil producers, are now more flexible about cooperating to cut output as crude prices have fallen to levels that hydrocarbon-rich nations didn’t foresee, Iraq’s Oil Minister Adel Abdul Mahdi said.
As the global economy heads for what is potentially a very volatile year, analysts have said that OPEC, which requires a consensus from all its members before it initiates a change, has to make a decision very soon.
The TSX looks set to kick off the trading week with losses, dragged down by sharply lower oil prices.
He said it was crucial that all major producers sit down to come up with a solution as the market needs to see inventories come down to levels that allow prices to recover and investments to return. China’s annual rail freight volume fell 11.9 per cent in 2015 versus a drop of 3.9 per cent in 2014, adding to worries about contracting economic activity in the second-largest oil consumer.
Saleh Al-Sada, Qatar’s energy minister, said it is still too early to call the bottom of the market.
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The next scheduled Opec meeting is not until June.
