Published: Fri, March 17, 2017
Money | By Oscar Reynolds

IEA: OPEC Compliance at 91% in February

IEA: OPEC Compliance at 91% in February

Oil tumbled to the lowest level since November at the start of the week after a report showed Saudi Arabia raised output back above 10 million barrels a day in February, underlining concerns over a global supply glut. OPEC output in February was 1.39 million barrels a day lower than its reference level. While Opec Secretary-General Mohammad Barkindo said that February compliance to the deal will be higher than January, Russia's Rosneft PJSC said higher USA output is the " main threat" to the agreement.

"The recovery path of USA tight oil is key to rebalancing the oil market over 2017, so is the compliance of the 11 non-OPEC countries that agreed to curb output", the IEA said.

OPEC believes non-OPEC oil supply will rise by 400,000 million barrels per day in 2017.

Indian basket of crude oil fell from around $ 55 a barrel on March 1 to $ 50 per barrel on Monday. High crude oil volatility in March 2017 suggests more downfall for crude oil prices.

That data, referred to as "secondary sources", showed OPEC as a whole getting closer to full implementation of the cutbacks, with output falling in February by 139,500 barrels a day to 31.958 million a day. Nigerian output was higher at 1.8 million bpd as per latest data, up 0.2 mbpd from 1.6 million bpd in January.

That means OPEC has complied by more than 100 percent with its plan to lower output for those nations to 29.804 million bpd, according to a Reuters calculation.

This comes as US drillers, particularly in the southern Permian Basin, have increased production, pushing the country's crude stockpiles to record highs and upsetting OPEC's plans to reduce global inventories. They got an added boost just before that session ended as the us dollar weakened in the wake of the Federal Reserve's decision to lift its benchmark interest rate (http://www.marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15) by 25 basis points, as expected.

At the end of November, the Organization of Petroleum Exporting Countries agreed to cut output by 1.2 million barrels per day (bpd) from January 1, initially for a period of six months.

OPEC is also taking a more confident view that world demand for oil will increase in 2017 as global economic growth recovers.

"The market is expected to start balancing or even see the start of a drawdown in oil inventories", the monthly report noted.

In addition, OPECs said crude inventories in developed countries rose above the five-year average in January, despite production cuts by some of the world's major exporters.

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