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OPEC Cuts Close To 1 Million Bpd This Month

Offshore oil rig

A Reuters survey of shipping data has revealed that OPEC has succeeded this month in cutting almost 1 million barrels from its combined daily output, in compliance with its November agreement. The figure represents a compliance rate of 82 percent, or 958,000 bpd, from the 1.164 million bpd agreed to be cut.

The amount cut so far, however, refers to OPEC members’ output levels from October and November last year. When the January data is compared with December figures, the reduction is larger, by more than 1 million bpd, or from an average of 31.17 million bpd last month to 30.01 million bpd this month. Reuters used a variety of sources to collect the data, including external sources, oil companies, and consulting firms, plus flow data.

Compliance with the November agreement is being watched closely by everyone in the oil business, as worries are still rife that some signatories to the deal would cheat in a bid to avoid losing vital oil revenues and market share.

Meanwhile, OPEC officials are doing their best to convince interested parties that the cut is going as planned, with some members, namely Saudi Arabia, cutting more than it had agreed to. Related: OPEC May Be Powerless To Stop Lower For Longer

A recent survey from Petro-Logistics, like Reuters’, showed that OPEC is cutting, though by less. The survey estimated the cut at 900,000 bpd for January, or 75 percent of the agreed total to be taken off the market. What’s perhaps more important in this particular survey is that it provided much needed confirmation from third parties that the group was indeed sticking to its targets.

As Investopedia notes, while the agreement was in the making, some observers argued that OPEC’s actions are getting increasingly irrelevant for international oil prices. This has turned out to be partially true, as rising production in the U.S. has stifled much of the upward potential for prices anticipated after the OPEC deal.

By Irina Slav for Oilprice.com

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