Janet Kong, regional CEO of BP’s eastern hemisphere supply and trading, warned Monday that while the oil supply was continuing to rebalance, OPEC should extend its current phase of output cuts beyond March 2018.
Speaking at the FT commodities Asia summit, in Singapore, Kong told delegates the oil supply/demand imbalance was improving. She said it was down to two main details; China’s increased consumption and the reduction in output agreed and adhered to, by OPEC members.
China has begun to increase its imports of the valuable commodity. This is part of a strategic plan to secure its own petroleum reserve to draw upon as and when it needs to.
In addition, OPEC’s agreement earlier this year, to reduce output to 1.8 million barrels per day, is helping to alleviate the three-year long glut of oil. OPEC members have consistently adhered to the agreement.
However, a private meeting Friday between OPEC and some non-OPEC members, resulted in no decision on whether to extend the agreement beyond the current end-date of March 2018.
Meeting attendees expressed pleasure at OPEC members adhering to the accord. There were also comments that an agreement for production levels further out was required. And that’s the view BP’s Kong took as she addressed the conference, Monday.
Kong said that it would only be possible to push the price of oil up to $60 per barrel if the current production cuts were extended beyond March next year.
Kong also said emerging markets are in the driving seat on oil consumption. That follows years of western markets and OPEC each having a leading role on the price and consumption of oil.
The price of Brent crude oil – the global benchmark – was around the $57 per barrel level. OPEC members have indicated they would be happier with an average price of $60 per barrel.