OPEC data show more than 90 pc compliance with supply cut

PUBLISHED : Saturday, 11 February, 2017, 1:16am
UPDATED : Saturday, 11 February, 2017, 1:16am

OPEC has delivered more than 90 per cent of pledged oil output curbs in January, according to figures the exporter group uses to monitor its supply, making a strong start to implementation of its first production cut in eight years.

The Organization of Petroleum Exporting Countries is cutting its crude output by about 1.2 million barrels per day (bpd) from January 1 to prop up oil prices and reduce a supply glut. Russia and 10 other non-OPEC countries agreed to cut half as much.

Supply from the 11 OPEC members with production targets under the deal has fallen to 29.921 million bpd, according to the average assessments of the six secondary sources OPEC uses to monitor its output and which were seen by Reuters. This amounts to 92 per cent compliance, according to an OPEC calculation -- more than many analysts expected.

“It is encouraging,” an OPEC source said of the compliance data so far.

“That’s the highest in OPEC history,” another OPEC source said.

Oil rose on Friday, trading above US$56 a barrel, supported by a report from the International Energy Agency -- one of the six secondary sources OPEC uses -- that put OPEC compliance at a record initial rate of 90 per cent.

The OPEC figure of 92 per cent comfortably exceeds the initial 60 per cent achieved when OPEC’s previous deal was implemented in 2009 and adds to indications that adherence has been high.

However, the 11 non-OPEC producers that joined the deal have not cut as much, delivering 40 per cent of their promised curbs in January, two OPEC sources said, citing OPEC calculations based on data from the IEA.

Non-OPEC’s lower compliance figure to date is partly due to the phased implementation of the deal by Russia, the largest non-OPEC producer cooperating with the organisation.

More upside expected for oil and gas prices, if OPEC deal delivers as promised

OPEC is scheduled to publish its first assessment of its January production based on the secondary sources in its monthly oil market report on Monday. The figures could be revised before they are published, OPEC sources said.

The group uses two sets of figures to monitor its output -- figures provided by each country and by secondary sources that include industry media. This is a legacy of old disputes over how much countries were really pumping.

OPEC’s production cut agreed last year was from levels as assessed by the secondary sources.

The other five secondary sources used by OPEC are oil-pricing agencies Platts and Argus, the US Energy Information Administration (EIA), consultancy Cambridge Energy Research Associates (CERA) and industry newsletter Petroleum Intelligence Weekly (PIW).