Iraq oil minister reports 85% compliance with OPEC supply cut

It's not been a good session for crude oil prices, and that's putting it mildly.

The eleven non-OPEC nations that agreed to downsize production agreed to a combined cut of nearly 600,000 barrels, but compliance amongst these countries has hovered around 66 percent over the past two months.

She added that the rise in U.S. oil inventories was leading traders to wondering how effective OPEC production cuts could be.

Will the OPEC deal be renewed in June? In 2016, oil investment in Canada was estimated at $37 billion, and the Canadian Association of Petroleum Producers expects it to rise to $44 billion in 2017.

"We've got a surplus situation". The thinking is, should oil prices fall below $50, what's to stop it from falling to, say, $48 or $45? The oil sands are considered to be too expensive at current prices.

"We will assess all this in May and how the market is responding", said Mr Al Falih. He called the $50 level that crude slipped below a "crucial point".

These include the rise of USA shale oil and the increasingly sophisticated extraction technologies for example being used across the Permian Basin in Texas. The nation's output is projected to surge to a record 9.73 million barrels a day next year, according to the EIA's monthly Short-Term Energy Outlook on Tuesday. It was four times as large as the inventory increase anticipated, and left stockpiles further in record territory. Global oil supplies plunged almost 1.5 million bpd in January 2017, with both OPEC and non-OPEC countries producing less, the IEA noted.

Oil prices had plunged 5 per cent to their lowest levels in 2017 on Wednesday, Reuters News agency reports, as US crude inventories surged to a new record high.

"Crude stocks were bolstered by rebounding imports, while both gasoline and distillates draws were exacerbated by higher implied demand", said Matt Smith, director of commodity research at ClipperData. Imports from other OPEC members - Iraq, Kuwait and Ecuador - also increased, he said. Novak said his meetings with ministers and others at the conference had been focused on conformity levels, the possibility of an extension and the response from U.S. shale to the deal. The situation is looking much brighter for the American oil industry, especially frackers in the Permian basin of Texas and New Mexico. The US Energy Information Administration also recently estimated oil output could top 10 million barrels per day by the end of 2018.

Data published by the US Department of Energy shows that US crude oil production climbed last week to just shy of 9.1 million barrels per day, its highest level in over a year. For more on crude oil prices and its drivers, read Part 1 of this series. Harold Hamm, the USA shale oil billionaire, warned that the industry could "kill" the market if it embarks on another spending binge.

  • Zachary Reyes