Lack of agreed methodology on OPEC compliance leads to confusion: Fuel for Thought

Based on the latest S&P Global Platts OPEC survey, the producer group’s compliance with its pledged oil output cuts is 98.5%. It is also 111.5%. At the same time, it is 71.9%. Depending on how compliance is measured, the oil market is getting different impressions of how closely OPEC is sticking to its much-ballyhooed deal, as barrel counters among the news media and various international agencies do not appear to have any standard agreed methodology for their calculations. The fuzzy math has many OPEC watchers dubious over whether the pact is succeeding in its goal of accelerating the market’s rebalancing. As early reports of OPEC production under the deal came out in February, the market seemed generally impressed that the promised output cuts were indeed happening. Petromatrix analyst joked in a recent note about news headlines trumpeting “OPEC’s compliance reaching a level that would make a North Korean leader jealous.” Since then, the market has reversed course, as news of stubbornly bloated US inventories have sowed doubt about the effectiveness of the OPEC agreement. To a man, OPEC ministers have touted that adherence to the deal is robust. Kuwaiti oil minister Essam al-Marzouq on Thursday declared that OPEC compliance was

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Source: CTRM Center

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