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Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC’s Secretary-General Mohammad Barkindo.
“I remain cautiously optimistic that the market is already rebalancing," Barkindo told reporters Sunday in Baghdad. “We have started seeing stock levels coming down.”
Record inventories accumulated since 2014 have been a drag on crude prices even as OPEC and some non-member producers curbed output. Slow progress in bringing down those stockpiles is one reason six members of the Organization of Petroleum Exporting Countries and Oman back extending production cuts beyond June, with Saudi Arabia and Kuwait saying oil stockpiles need to fall to the five-year average.
Brent crude, the global benchmark, declined 0.3 percent to $53.39 a barrel by 8:44 a.m. in Dubai. Prices jumped 4 percent last week.
Iraq, which initially sought an exemption from OPEC’s output cut, was 98 percent compliant in March, after production data was revised Saturday, Iraq’s Oil Minister Jabbar Al-Luaibi told reporters Sunday in Baghdad. Last Thursday, with one day left in the month, Iraq’s production was 4.46 million barrels a day for March, Falah Al-amri, director general of Iraq’s State Oil Marketing Organization (SOMO), told reporters.
According to OPEC, Iraq agreed to cut production by 210,000 barrels a day to 4.351 million barrels a day. Barkindo said he has been “assured they will comply fully.”
Iraq plans to increase crude production capacity to 5 million barrels a day by the end of this year, Luaibi said. Capacity is currently estimated at 4.7 million barrels a day, according to data compiled by Bloomberg.