Investing.com – Oil prices pared losses on Monday after the Organization of Petroleum Exporting Counties’ (OPEC) monthly report showed that the cartel had registered 93% compliance in their agreement to reduce production beginning on January 1.
The report revealed that the cartel’s oil production decreased by 890,200 barrels per day to average 32.14 million barrels per day, according to data from secondary sources.
According to a Reuters’ calculation, OPEC members achieved 93% of the pledged 1.16 million cut.
The report also showed that output decreased the most in Saudi Arabia, Iraq and the United Arab Emirates (UAE), while production in Nigeria, Libya and Iran increased.
At the same time, OPEC increased its forecast for world oil demand growth by 35,000 barrels per day to 1.19 million barrels per day in 2017.
Oil pared losses after the report, with U.S. crude futures trading down 0.37% at $53.66 by 7:34AM ET (12:34GMT), compared to $53.48 before the release and Brent oil exchanging hands at $56.42, compared to $56.27 earlier.
Despite the compliance with the production cuts, market participants remained concerned about the ramp up in U.S. drilling activity.
Indeed, OPEC itself noted that U.S. crude oil production could rise to over 7.3 million barrels per day by the end of 2017. That compared to 6.7 million at the end of 2016.
Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. increased by 8 last week, the 14th gain in 15 weeks.
That brought the total count to 591, the most since October 2015, underlining concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.