OPEC’s commitment to reducing oil output remained in place in April, reports out on Tuesday confirmed, with Saudi Arabia keeping below its production target. Unexpected cuts in Libya and Nigeria continued to the production decrease, as a result of political unrest in the regions. Nevertheless, higher-than-expected output from the United Arab Emirates kept OPEC’s compliance with its production cut at only 90 percent, as compared with the expected 92 percent forecast, according to a Reuters survey.
OPEC committed to reducing output by 1.2 million barrels per day for six months beginning on January 1, with an expectation that non-OPEC oil producers would reduce production by roughly half that amount.
Oil prices haven’t yet bounced back as OPEC expected, largely due to an increase in production in the United States. U.S. crude production is increasing at an annual rate of more than 1 million barrels per day, a rate not seen since the oil boom of 2012-14. The majority of the increase is coming from non-shale producers in Alaska and the Gulf of Mexico.
The Energy Information Administration has raised its year-end forecast from 9.22 million bpd in January to 9.64 bpd in April and by the end of the year, production is expected to surpass the previous highs set in April 2015.