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EghtesadOnline: Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC’s Secretary-General Mohammad Barkindo.

An overhang of an estimated 285 million barrels of oil in storage has been a drag on crude prices even as OPEC and some non-members producers curbed output. Six members of the Organization of Petroleum Exporting Countries and Oman back extending production cuts beyond June, with Saudi Arabia and Kuwait saying oil stockpiles need to fall to the five-year average, Bloomberg reported.

Oil had its biggest weekly increase this year last week amid speculation OPEC will extend its deal to curb output, and after a U.S. government report showed the nation’s refineries boosted crude use by the most in almost three years while fuel supplies fell. Morgan Stanley said in a report that “less visible” crude stockpiles, including in China, Japan and floating storage around the world, have declined 72 million barrels this year.

“I remain cautiously optimistic that the market is already rebalancing," Barkindo told reporters Sunday in Baghdad. “We have started seeing stock levels coming down.”

Iraq, which initially sought an exemption from OPEC’s output cut, was 98 percent compliant in March, after production data was revised Saturday, Iraq’s Oil Minister Jabbar Al-Luaibi told reporters Sunday in Baghdad. Last Thursday, with one day left in the month, Iraq’s production was 4.46 million barrels a day for March, Falah Al-amri, director general of Iraq’s State Oil Marketing Organization (SOMO), told reporters.

According to OPEC, Iraq agreed to cut production by 210,000 barrels a day to 4.351 million barrels a day. Barkindo said he has been “assured they will comply fully.”

Iraq plans to increase crude production capacity to 5 million barrels a day by the end of this year, Luaibi said. Capacity is currently estimated at 4.7 million barrels a day, according to data compiled by Bloomberg.

Higher prices as a result of the OPEC cuts will encourage more U.S. shale production, U.S. State Department official Alan Eyre said Sunday at a Baghdad energy conference. “Today’s oil price is the new normal,” he said.

Opec oil market oil Supply oil deal oil cut Mohammad Barkindo