OPEC may not need to cut supply further when ministers meet Sunday as the oil market is showing signs of recovery after a $100 price collapse, an OPEC delegate said Wednesday. “Signals from the market are positive,” the delegate told Reuters by telephone. “The market is feeling the effect of OPEC's cuts so far, it is tightening. If everything is going in the right direction, probably this is an indication we shouldn't rush into another cut decision.” If bearish news in coming days leads ministers to decide a cut is necessary, they may consider a modest cut of around 500,000 barrels per day, he said. The Organization of the Petroleum Exporting Countries (OPEC) has since September agreed to cut output by 4.2 million bpd, around 5 percent of global supply. The group has delivered about 80 percent of the pledged reductions in February, according to a Reuters survey. There had been less talk from ministers about another cut and more talk about compliance with existing cuts over the past two weeks due to improvements in the market, the delegate said. The changing structure of oil prices was making it less profitable than in previous months to store oil and sell it later, he added. Wide premiums for future barrels had encouraged refiners to store crude. Oil and trading companies have filled up a flotilla of crude ships and left them floating on the water to sell at a profit later. “News is coming in that stocks are falling,” the delegate said. “Floating storage is coming down. OPEC crudes are being priced higher. This is why lately you have seen people talking less about cuts.” Crude stocks in top consumer the United States have fallen for two of the last three weeks, while gasoline demand has shown signs of gaining from year-ago levels in recent weeks and lent support to prices. An Arabic language newspaper reported Monday that the world's top exporter wanted stricter compliance with existing production cuts before considering more. But some OPEC members, alarmed by falling demand as the economy contracts, have made the case for more cuts. A top official in Kuwait said Wednesday that the group would likely cut output again to support prices at its meeting on March 15. The oil price remains well below the $75 a barrel that the king of top oil exporter Saudi Arabia named as fair last year. US crude traded under $46 Wednesday, more than $100 below the record high hit last July.
