Morgan Stanley have found a new market OPEC tactics

The OPEC members moved to the hybrid tactics in the struggle for world oil market, from the latest review of Morgan Stanley, discusses the politics of the cartel (got), — “Where are the reductions in OPEC?”. Formally, the cartel members strictly fulfill the assumed obligations to reduce production in January—March, the rate of implementation of the agreements reached 99%, according to the IEA. While the supply of OPEC oil to the world market is not reduced, as reduced production, — evidence that the producers of the cartel continue to fight for their clients and are not going to give up their share to competitors.

In January—April production of OPEC decreased by 1.4 million barrels. per day (International energy Agency, IEA), while exports of the cartel for the period decreased only by 0.9 million barrels. per day (data from the Joint oil statistics initiative, JODI), and shipments of OPEC oil to tankers for export, in turn, fell 0.8 million barrels. per day (data from the sectoral provider ClipperData). The largest consumers of OPEC oil — the United States, China, Japan, South Korea and Singapore — in January—March even increased purchases of raw materials on 1 million Barr. per day compared to the previous quarter. Tanker supplies of OPEC oil to ports around the world also increased in January—April, down 0.7 million barrels. a day, to be ClipperData.

The difference in data between the volumes of loading / export supply of oil by OPEC (which are growing) and mining (which is shrinking) indicates that countries sell oil from its reserves, over and above that is exported immediately after the extraction, according to a survey. According to JODI, inventory levels reduced in all countries, the cartel that publish such statistics. However, in the aggregate stocks of oil and oil products in all countries of the cartel rose in January—February, 105 million barrels, it follows from the broad statistics, combining data from the IEA, the energy information Administration of the United States, the Chinese Agency “Xinhua” and Thomson Reuters Datastream.

The effect of time lag should subside in the coming weeks and months, said the head of Morgan Stanley “European gas market,” Martin Rats. As a result, data on imports should come in line with the data about shipments, and the market must return to the shortage of oil. April data on shipments for export suggests that exports will start to decline, reflecting reduced production. Against this background, Morgan Stanley expects that during the remainder of 2017, the inventory level will be significantly reduced that will support the oil prices.

Rats agree with the Director of energy Institute for energy and Finance Alexei Gromov. “We don’t see in the strategy of OPEC is not wrong, because the task of reducing production in any case cannot be linked to the decrease of sales in the market, explained thunders. — To the contrary, while reducing production to meet the needs of demand, which in the world still growing, although not as rapidly as expected, to sell oil from stockpiles”. Selling oil from storage is a positive signal, because one of the effects that are expected from a reduction in production, the decrease of excessive reserves in the world, says the expert. This is an expected consequence of the managed reduction of production, which will lead to a balanced market by the end of this year, he said.

“Monthly report, OPEC did not disclose the amount of the extracted oil from OPEC countries, explained senior Director Fitch Ratings, Maxim Edelson. — At the same time, from the reports of the OPEC, it follows that only in 2016, in store was directed hundreds of millions of barrels of oil produced”. In the report Morgan Stanley noted that in 2017, the reduction of oil reserves from OPEC countries will average 800 thousand Barr. a day. Part of this decline is due to the expected sale of the OPEC countries have reserves of crude oil in the global market, says the expert.

Accordingly, while OPEC countries reduced production volumes in accordance with the Vienna agreement, the General decline in supply of oil on world markets by OPEC at the end of April 2017 to at least 500 thousand Barr. less than it would be in the absence of shipments of oil from the vaults of the countries of the cartel concluded Edelson.