Feb. 14 (UPI) -- While pointing to emerging optimism in the energy markets, OPEC's secretary general said Wednesday that any focus on stability should be long-term.
A decision by the Organization of Petroleum Exporting Countries last year to offset supply-side strains with coordinated production cuts helped set a floor under crude oil prices of around $50 per barrel. Strong compliance with the agreement, now in its second year, helped drive the price of oil above $70 per barrel in January, a multi-year high.
Speaking at an investment forum in Saudi Arabia, OPEC Secretary General Mohammad Barkindo said the overall market has settled on firmer ground, after several years of contraction.
"The market has now rediscovered its optimism and confidence," he said. "Others have even remarked that it has finally found its compass."
In its latest monthly market report, the International Energy Agency said that supply-side strains are easing considerably. At this point last year, the crude oil inventory held by the world's leading industrial economies sat at 264 million barrels above the five-year average. Now that's closer to 50 million barrels of overhang.
An over-supplied market, led by the emerging shale oil boom and a previous OPEC policy to defend a market share with stronger production, pushed oil below $30 per barrel in 2016. Mirroring comments made by Russia's energy minister, Barkindo said the focus should be on long-term issues, not short-term movements in the price of oil.
"Indeed, our industry is inherently a long-cycle industry that depends on massive long-term investments in research, development, exploration and production to ensure its future, and to be a dependable and reliable supplier of oil to consumers across the globe," he said.
Crude oil prices have erased the gains made in January. The price for Brent crude oil, the global benchmark, was heading toward $62 per barrel early Wednesday in what some market analysts have said is a sign of a correction.
Iranian Oil Minister Bijan Zangeneh said last month OPEC members didn't want to see Brent crude oil prices move much beyond $60 per barrel on fears the rally would incentive shale oil production, which by itself is close to rivaling Saudi Arabia.