OPEC said on Tuesday oil inventories had continued to rise despite the start of a global deal to cut supply and raised its forecast of production in 2017 from outside the group, suggesting complications in the effort to clear a supply glut.
The Organization of the Petroleum Exporting Countries is curbing its output by about 1.2 million barrels per day (bpd) from Jan. 1, the first cut in eight years. Russia and 10 other non-OPEC producers agreed to cut half as much.
But in its monthly report OPEC said oil stocks in industrialized nations rose in January to stand 278 million barrels above the five-year average, of which the surplus in crude was 209 million barrels and the rest products.
“Despite the supply adjustment, stocks have continued to rise, not just in the U.S., but also in Europe,” OPEC said in the report.
“Nevertheless, prices have undoubtedly been provided a floor by the production accords.”
In the report, OPEC pointed to a increase in compliance by its members with their deal to cut output from Jan. 1.
Supply from the 11 OPEC members with production targets under the deal fell to 29.681 million bpd last month, according to figures from secondary sources that OPEC uses to monitor its output.
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. OPEC didn’t give a compliance figure in the report.
But the report revised up its estimate of oil supply from producers outside OPEC this year, as higher oil prices following the OPEC and non-OPEC cut help spur a revival in U.S. shale drilling.
Production outside OPEC is now expected to rise by 400,000 barrels per day (bpd), 160,000 more than previously thought. U.S. oil output in 2017 was revised up by 100,000 bpd.
While the OPEC secondary sources said Saudi output fell in February, Saudi Arabia reported to OPEC that it increased.