OPEC achieved the best compliance rate in its history at the outset of an accord to clear the oil glut, a plan that’s being supported by surprising strength in demand, the International Energy Agency said.
The Organization of Petroleum Exporting Countries implemented 90 percent of promised output cuts in January, the first month of its agreement, as key member Saudi Arabia reduced production by even more than it had committed, the agency said. Eleven non-OPEC members who joined the agreement have made about half their pledged reductions, according to the IEA.
Even if those reductions are made, total supply from outside OPEC will increase by 400,000 barrels a day this year after plunging in 2016, due to gains in Brazil, Canada and the U.S. Non-OPEC nations will pump an average of 58 million barrels a day in 2017, about 100,000 a day more than predicted in last month’s report.
The 11 OPEC nations bound by the accord reduced output by 1.12 million barrels a day to 29.93 million a day last month, with Saudi Arabia delivering 116 percent of the curbs it had promised.
While the IEA based its estimate of compliance on how much of the total cut OPEC delivered, the group also set a collective target for its members at the level needed to reduce inventories. With output rising from the two members exempt from making cuts — Libya and Nigeria — OPEC’s compliance with that total is only about 60 percent, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.
OPEC’s own data, derived from six external sources including the IEA, showed a compliance rate of 92 percent, according to a person familiar with the matter. The organization will publish the statistics in its monthly report on Feb. 13.