The OPEC coalition is leaning toward switching to looking at number of days of stock consumption rather than an average of barrels in storage as it mulls changes to the measurement of market balancing, Russian energy minister Alexander Novak said Friday.
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The group is also looking into a 10-year period for viewing stock averages instead of the current five-year metric, he said.
"We have discussed various optionsincluding the overall number of days of stock consumption," Novak said.
Such a measurement could provide a more accurate estimate of market fundamentals, although the difference between the two approaches seems not significant now, he acknowledged.
"Such analysis showed that even if we use the number of days as a base, we have also nearly balanced. If we take the 10-year period, today it takes fewer days to balance the market," said Novak, speaking on the sidelines of the St. Petersburg International Economic Forum.
The comments follow an OPEC statement earlier in the day that noted "measuring market stability through a single metric is not sufficient and therefore a more comprehensive set of metrics is required."
The OPEC alliance has lowered stocks close to their five-year average goal much quicker than expected due to supply outages in Venezuela and strong compliance to the 1.8 million b/d output cut deal. However, Saudi energy minister Khalid Al-Falih said Friday he had reservations about the accuracy of the metric even though it gave a good approximate guide.
"What matters is we are close to rebalancing, but we will see what happens in the market in the next month, by the time of the big ministerial meeting, we will have more information," Novak said.
Novak also confirmed that Russia would like to lift production ceilings under the OPEC-led output cut deal in which Russia agreed to gradually cut 300,000 b/d. The deal, in place since January 2017, has 24 OPEC and non-OPEC countries jointly cutting a combined 1.8 million b/d.
Novak suggested that a gradual rise in production should mirror the output cut percentages. "I think it would be fair to have it proportional, but I don't know what the final proposal and decision will be."
Saudi Arabia and Russia both signaled Friday that output could "likely rise" in the second half of the year, if the coalition's ministers approve the move at their June 22-23 meeting in Vienna.
