Qatar National Bank (QNB) Group said that overall compliance with oil production cuts agreed in November 2016 between OPEC and some other major non-OPEC producers was around 60% during Q1 2017.
In its weekly economic analysis published on Saturday, QNB Group said the output cuts are likely to be extended, expecting the market to rebalance in 2017 and keep our oil price forecast unchanged at USD55/b.
World oil supply will probably remain largely unaffected, it said, adding that Any increase in OPEC production after June would probably push down prices and deter further increases in US production.
The analysis said oil prices in 2017 have been determined by two main counterbalancing forces supply cuts led by OPEC and rising shale oil production in the US. The production cuts agreed in November 2016 between OPEC and some other major non-OPEC producers drove a rally in prices towards the end of 2016 and into 2017.
The implementation of those cuts at the beginning of 2017 helped keep prices high during January and February. However, in March and April oil prices weakened amid doubts about compliance with the agreement and concerns about rising US production.
The report examined key questions around OPEC and non-OPEC supply that will be critical for global oil markets this year and find that US production increases are likely to cap oil prices at around USD55 while OPEC production cuts will provide a floor.
First, is OPEC complying with output cut targets? Overall, OPEC’s compliance with the targets for output cuts set in November was 100% in Q1 2017. Much of this is attributable to Saudi Arabia cutting production by more than agreed, but there was a high compliance rate among other OPEC members as well.
Second, are other major producers complying with their targets? Non-OPEC producers who were party to OPEC’s November agreement have been less compliant. Russia has achieved around half of its targeted cuts, but others have actually increased production slightly. As a result, overall compliance among OPEC and non-OPEC members was around 60% during Q1 2017. The slippage from targeted cuts may have contributed to the recent weakness in oil prices, said the QNB analysis. 

Source: QNA