HIGH LEVEL OF CONFORMITY
OPEC - The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) convened in Kuwait City for its second meeting on 26 March 2017. It announced that, based on the Report of the Joint OPEC/Non-OPEC Technical Committee (JTC) for the month of February 2017, OPEC and participating non-OPEC countries have continued their progress towards full conformity with their voluntary adjustments in production.
The JMMC was established following OPEC's 171st Ministerial Conference Decision of 30 November 2016, and the subsequent Declaration of Cooperation made at the Joint OPEC/Non-OPEC Ministerial Meeting, held on 10 December 2016; at which 11 non-OPEC oil-producing countries cooperated with OPEC Member Countries in a concerted effort to accelerate the stabilization of the global oil market through voluntary adjustments in combined production of around 1.8 million barrels per day. The resulting Declaration, which came into effect on 1 January 2017, is for six months and is extendable for an additional six months, depending on the status of supply and demand, including global inventories.
The JMMC expressed its satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 per cent conformity. As at February 2017, the OPEC and participating non-OPEC countries achieved a conformity level of 94 per cent, an increase of 8 percentage points over the January 2017 performance. This demonstrates the willingness of all participating countries to continue their cooperation.
The JMMC took note that certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have slowed down the positive impact of the production adjustments on inventory drawdowns. At the same time, the liquidation of positions by financial players in the market was also observed.
However, it was felt that the end of the refinery maintenance season and a noticeable slowdown in the US stock-build, as well as the reduction in floating storage, will support the positive efforts undertaken to achieve stability in the market.
In view of the above, the JMMC requested that the JTC with the OPEC Secretariat review the oil market conditions and revert to the JMMC in April 2017 regarding the extension of the voluntary production adjustments as stipulated in the Declaration of Cooperation, in order to ensure market stability. The JMMC will deliberate before submitting its recommendation to the participating countries. This reaffirms the commitment of OPEC and participating non-OPEC countries to continue to cooperate for the benefit of producers and consumers alike, as has been consistently advocated.
The JMMC, led by its Chairman, HE Issam A. Almarzooq, Minister of Oil and Minister of Electricity and Water of the State of Kuwait, paid a courtesy call on the Emir of Kuwait, His Highness, Sheikh Sabah Al-Ahmad Al-Sabah, to thank him and his government for the support and guidance given OPEC in the run up to the historic OPEC decisions in November and December 2016 and pledged their commitment to the full and timely implementation of the decisions.
His Highness, the Emir, welcomed the delegation and thanked the members for honouring the State of Kuwait with the responsibility of the Chairmanship of the JMMC and for hosting the Second Meeting of the JMMC in Kuwait City.
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