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Crude Oil Drops Despite High Compliance to OPEC Cuts

February 22, 2017 at 17:51 by Vladimir Vyun

Crude oil dropped today even though the Organization of Petroleum Exporting Countries talked about high compliance to the production cuts announced last year. OPEC Secretary General Mohammed Barkindo said that he is “cautiously optimistic” as the OPEC members showed more than 90% compliance to the agreed upon production cuts:

All countries involved remain resolute in the determination to achieve a higher level of conformity.

He also voiced hope that Russia and other non-OPEC producers will also stick to their promises even though so far they have shown lower compliance:

You have to give them the benefit of the doubt in the initial stages. I am confident that the non-OPEC will also raise their level of conformity to bring it at par with OPEC.

As for potential extension or deepening of supply cuts, he said that it is too early for such discussions at this stage:

I think it will be very premature. The market is so dynamic it is becoming increasingly challenging for even professional forecasters.

Now, traders wait for tomorrow’s supply data from the US Energy Information Administration. Usually, the report is released on Wednesday, but the release was delayed due to President’s Day on Monday. Last week, the report showed sizable growth by 9.5 million barrels.

Futures for delivery of WTI crude oil in April slumped 1.44% to $53.55 per barrel as of 17:32 GMT on NYMEX today. Contract for Brent crude dropped 1.5% to $55.81 per barrel on ICE.

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