OPEC Chief Says "Tremendous Efforts" Are Being Made In Cutting Production But Dodges Question of Whether the Cutbacks Are Enough

OPEC secretary general Mohammed Barkindosays "tremendous efforts" are being made by all 24 participants involved in the oil cutback deal

To hear Mohammed Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC) tell it, the first fortnight of the cartel's implementation of its highly-criticized production cutback agreement is nothing but good news, with "tremendous efforts" being made by all 24 participants involved in the deal.

Barkindo told BloombergMarkets, "so far, so good," even though $55 per barrel for crude is still "far away from the equilibrium price."

He also reiterated the contention of many OPEC members that "demand is rising steadily"; but when asked if he thinks the cutbacks are extensive enough, he replied, "it's premature at the moment to talk about whether the numbers are sufficient or not, we're just two weeks into the agreement."

When asked how OPEC will assess compliance at the upcoming meeting in Vienna, he said "the framework is a work in progress, consultations are ongoing," and that "a mechanism" will be in place by the time the meeting commences on Sunday.

The latest findings from the International Energy Agency support some of Barkindo's remarks: commercial oil inventories in the major industrialized countries fell for a fourth consecutive month in November, according to the agency, although they are still over 300 million barrels above the five-year average.

Plus, stronger than expected oil consumption has caused the IEA to raise its estimate of global demand growth over the last year by 110,000 barrels per day (bpd) to 1.5 million bpd, above the average 21st century rate of growth of 1.2 million bpd.

Still, the lingering notion that the cutbacks are too conservative to do any good persists, and OPEC critics would presumably take no solace in Thursday's news that Saudi Arabia's crude exports surged to a 13.5 year high of 8.26 million bpd in November, prior to restricting supplies under the cutback deal.

It fell upon Tamas Varga, analyst for PVM Oil Associates, to offer what could best be described as sober advice: he told Reuters, "Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive."

Another consistently sober analytical voice seems to be Goldman Sachs: last September it warned that the global glut will continue regardless of what measures OPEC takes, and that returning supply for Iraq, Libya, and Nigeria could compel it to reduce its average 2017 price forecast for U.S. crude from a $52.50 projection to $45 per barrel.