NEW OIL COALITION

PLATTS - The divergence between oil supply and demand had been "markedly broken," and the market had moved into backwardation less than a year into OPEC's agreement with major non-OPEC producers to curtail oil output, Saudi oil minister Khalid al-Falih said Thursday.

Inventories were steadily being reduced, and it was now clear supply is less than demand, Falih told delegates at the Russian Energy Week conference in Moscow.

"Floating inventories have almost vanished. The structure of the forward curve has flipped into backwardation," Falih said.

After saying he was no more optimistic on oil market fundamentals than he had been for the last two or three years, Falih added that OPEC would continue to look at supply, demand and inventories as the three "key controllables."

Demand had increased by 1.5 million b/d in 2017, and this would be sustained into 2018, Falih said, adding that this was a "good planning basis."

He also welcomed the contribution of US shale oil to global output, but warned that it was unreasonable to expect shale oil production to "somehow spring up at certain places and grow exponentially." This had been proven to be unrealistic, he said, and "we are well over the hump."

As the world's two largest oil producers, Saudi Arabia and Russia have led the 24-country OPEC/non-OPEC coalition in its 1.8 million b/d supply cut, which is scheduled to end in March.

Falih paid tribute to his Russian counterpart, Alexander Novak, for his role in "bringing the industry towards understanding that this is not a zero- sum game."

The agreement had breathed life back into OPEC, Falih said, with the group previously finding itself unable to cope with surging supplies and rising global inventories. The coalition members are due to meet on November 30 in Vienna to discuss the future of the deal.

Speaking on the same panel, Novak said inventories had halved in the first eight months of the deal, which became effective in January. They had previously been more than 340 million barrels over the five-year global average.

"In the first eight months, stock levels have halved. That contributes to the re-balancing of the market, and the return of investment we are observing," Novak said.

Compliance was also on the rise, with 100% adherence to the agreement, he said, adding that the new found trust among the coalition's disparate members would foster "future cooperation, the recovery of the market in order to make energy sustainable and safe."

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Earlier:

SAUDI ARABIA:			RUSSIA:
October, 4, 23:55:00 SAUDIS - RUSSIA RELATIONSHIPS Saudi Aramco will participate in the historic Royal Visit to Russia by The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al-Saud from October 4 to 7, 2017.			October, 2, 14:50:00 RUSSIAN OIL PRODUCTION: 10.91 MBD Russian oil output stood at 10.91 million barrels per day (bpd) in September, unchanged from August and staying at a low for the year
August, 31, 12:25:00 SAUDIS - RUSSIA OIL DEAL Top oil producers Saudi Arabia and Russia are pushing to extend their deal to limit crude oil production for another three months, which would leave the output deal between OPEC and non-OPEC producers in place through the end of June, people familiar with the matter said.			July, 10, 12:15:00 RUSSIAN OIL PRODUCTION DOWN 0.6% The energy ministry is forecasting that crude production in Russia will fall by 0.6% year on year to 549.1 million mt, or 11.027 million b/d on average, in 2017 on the extension of the output cut deal.
August, 14, 14:20:00 SAUDI'S DEFICIT DOWN Saudi Arabia's state budget deficit shrank by a fifth from a year earlier in the second quarter of this year as revenues rose moderately and spending fell marginally, finance ministry figures showed on Sunday.			May, 26, 14:15:00 OPEC & NON-OPEC AGREEMENT OPEC Member Countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan, taking into account the decision reached by OPEC at the 172nd Meeting of the Conference, recognized the need for continuing cooperation among oil exporting countries in order to achieve a lasting stability in the oil market.
July, 12, 14:05:00 SAUDI ARAMCO INVESTMENT: $300 BLN “Saudi Aramco plans to invest more than $300 billion over the coming decade to reinforce our preeminent position in oil, maintain our spare oil production capacity and pursue a large exploration and production program centered on conventional and unconventional gas resources.”			May, 24, 19:35:00 RUSSIAN OIL REDUCTION Russia itself is now slightly overcomplying with its commitment to cut 300,000 b/d of oil production from October levels, having achieved a 310,000 b/d cut since the beginning of the month.
July, 12, 14:00:00 SAUDIS WILL CUT Saudi Arabia will cut crude oil shipments to its customers in August by more than 600,000 barrels per day to balance the rise in domestic consumption during the summer, while staying within its OPEC production commitment, a Saudi industry source said.			May, 12, 11:50:00 OIL PRODUCERS CUTTING OPEC will decide formally whether to extend the cuts when its ministers meet in Vienna on May 25. The producer group and other major suppliers including Russia agreed last year to cut their collective production by about 1.8 million barrels a day for the first half of 2017 in an effort to reduce bloated global stockpiles and re-balance the market.
June, 21, 11:05:00 SAUDIS OIL RESOURCES UP Saudi Arabia effectively grew its recoverable oil resources by 73 billion barrels this year after lower tax rates for state producer Saudi Aramco boosted the country's estimated prospective resources.			May, 2, 16:15:00 RUSSIA: THE TOP The world’s largest energy consumer increased imports from Russia by about 9.3 percent to 4.69 million metric tons in March from February, according to data released Tuesday by the General Administration of Customs. That’s also up 0.9 percent from a year earlier. Saudi Arabia, the biggest crude exporter, retreated to the third-biggest seller last month from No. 1 a month earlier as shipments fell 4.6 percent to 4.55 million tons.
May, 26, 14:10:00 NO ONE ENVIES THE SAUDIS No one envies the Saudi Arabians now. Yes, the Brent price has rebounded from its of 2015-16 lows to stabilise over $50. At the Opec meeting in Vienna this week the delegates agreed to extend production curbs for another nine months.			April, 19, 17:50:00 OPEC OIL DECISION OPEC and several other producers including Russia agreed in December to pump less oil in an orchestrated effort to end an oversupply weighing on prices. Compliance with the cuts was more robust in March compared to the previous month, Barkindo said. Brent crude has gained about 19 percent since OPEC decided to pare output, and the benchmark grade was 24 cents higher at $55.13 a barrel at 11:59 a.m. in London.