Producers have pledged to lower output beginning this month in order to support prices
Energy ministers from OPEC and non-OPEC countries meeting in Vienna on Sunday have struck a positive note regarding their agreement to cut oil output as a committee set to monitor compliance with the deal meets for the first time.
"I am satisfied, I am optimistic and, as I said, the markets are on their way to rebalance and it's happening," Saudi energy minister Khalid al-Falih said.
Compliance with the agreement, which calls for cuts to begin this month, had been "fantastic", he said.
Kuwaiti oil minister Essam Al-Marzouq, who chairs the five-member compliance committee, said it would examine how to best monitor compliance and what level of compliance would be acceptable.
The other members of the committee represent Algeria, Venezuela, Russia and Oman.
A deal reached on Dec. 10 between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers marked the first such pact since 2001.
Under it, producers will lower output by nearly 1.8 million barrels per day (bpd) aiming to ease a global glut that has weighed on oil prices for more than two years.
"Usually non-OPEC would raise their production to compensate for voluntary cuts by OPEC. Now, we are seeing voluntary cuts by both sides," Fail said.
Some 1.5 million bpd in crude production had already been taken out of the market, he said last week.
"The other 300,000 bpd, for all I know, is still happening," Falih said on Sunday, adding he hoped for 100 percent compliance in February.
Venezuela has achieved more than half of its planned 95,000 bpd cut, Oil Minister Nelson Martinez told reporters.
Full compliance could take global oil inventories back close to their five-year average by mid-2017, lowering oil in storage by around 300 million barrels, Falih said.
"[There are] no surprises so far in terms of demand or supply from other sources so there is no reason for us to suddenly come in January and say we need a bigger reduction or a longer period," he said.
Saudi Arabia is producing slightly below 10 million bpd and has informed buyers of Saudi crude of substantial cuts scheduled for next month, he said.
Russian Energy Minister Alexander Novak on Sunday also said he was satisfied with the level of compliance shown.
Russia has cut its oil output by around 100,000 bpd, Novak told Russia's TASS news agency. Novak added Russian oil production has averaged around 11.15 million bpd this month.
In his opening speech to the Vienna meeting, Novak said many countries had lowered their oil output by more than they had agreed to.
He said Russia was lowering its production ahead of schedule.
He told reporters that oil output cuts had been positive for markets, adding it was too early to talk about extending the output-reduction deal beyond the planned six months but that remained an option.
"Every one sees that the agreements on oil production cuts have already have a positive effect on oil markets. The market has become more stable and predictable."For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.