OPEC achieves 90% compliance on output cuts: IEA

OPEC members achieved a record 90 percent compliance rate in January with production cuts agreed on last year, Paris-based International Energy Agency (IEA) said on Friday.

The IEA estimates that the producer group’s January output was 32.1 million barrels per day (mbd) with some producers – notably Saudi Arabia – appearing to cut by more than required.

Members of OPEC reached an agreement on Nov. 30, 2016, to slash crude production by 1.2 mbd in order to rebalance the market and shore up oil prices, which have more than halved since late-2014. The six-month deal set an output ceiling of 32.5 mbd for the producer group.

The following month, 11 producers from outside the 13-nation cartel pledged to cut production by 558,000 barrels per day (bpd), with Russia agreeing to cut 300,000 bpd.

As far as compliance by non-OPEC producers is concerned, preliminary data suggests that Russia’s production was down by 100,000 bpd in January, the report said.

Elsewhere, Oman said it has cut by 45,000 bpd in line with its commitment while Kazakhstan is reportedly exceeding its target, although no official data has been released.

However, non-member countries outside of the output deal are expected to substantially increase production, which could affect market rebalancing. The combined output of Brazil, Canada and the US, for instance, is expected to grow by 750,000 bpd in 2017.

Moreover, high stock levels persist globally, the agency warned, noting that OECD inventories of crude and products will remain “significantly above average levels” by the end of H1 2017.

“The continued existence of high stocks, plus caution from the markets in assessing the level of output cuts and how other producers might grow production, explains why Brent crude oil prices have remained at the mid-$50s per barrel (bbl) level since mid-December after receiving a post-output deal boost of close to $10/bbl. The oil market is very much in a wait-and-see mode,” the agency concluded.

Oil prices ended last week on a higher note following the news of high compliance with production cuts. Brent crude jumped almost 2 percent to close at $56.7/bbl while West Texas Intermediate (WTI) rose 1.6 percent to $53.86/bbl.