In February, compliance among producers participating in the OPEC supply cut agreement hit a record high of 138 per cent, up from January’s high of 133 per cent. Anadarko photo by Mike Goldwater.
OPEC supply cut numbers due to high adherence by Saudi Arabia, other Gulf OPEC producers and drop in Venezuelan output
According to a joint OPEC and non-OPEC committee, compliance with the OPEC supply cut agreement hit a new high last month, and the deal which includes Russia, is helping to shrink the global glut of crude.
Compliance with the agreement hit 138 per cent in February, besting January’s 133 per cent and is the highest since the deal began in January, 2017.
OPEC says the market is expected to rebalance sometime between the second and third quarters of this year.
Despite the shrinking fuel glut, Saudi Arabia says it is too early to discuss an exit strategy. A ministerial panel will meet to review the agreement in April.
“The committee stressed that all participating countries should strive to achieve or exceed full conformity with their voluntary production adjustments,” the statement from OPEC said.
“February continued the accelerated rebalancing path witnessed in recent months.”
Global crude stocks were 44 million barrels over their five-year average in February. This is the closest the cartel and other participants have come to achieving their goal of matching those five-year averages.
“Stocks can now be considered as close to normal levels,” an OPEC source told Reuters.
Adherence to the agreement as well as a decline in Venezuela’s crude production have helped OPEC achieve and exceed its goal. Venezuela is a participant in the agreement, but most of its reduction in supply is due to an economic and political crisis that is crippling the South American oil-rich nation.
The OPEC supply cut is credited with boosting oil prices which were over $71/barrel earlier in the year and have since slipped to $68/barrel.
Prices were also underpinned by a surprise decline in US crude stocks.