IEA OMR: The First Cut is the Deepest

Opec president Qatar’s Energy Minister Mohammed bin Saleh al-Sada

But it also repeated its forecast that overall non-OPEC production is likely to increase by almost 400,000 b/d this year, compared with an 800,000 b/d decrease last year, thanks to a revival in USA shale output and longer term investment in Brazil and Canada.

Oil futures climbed Friday after the International Energy Agency reported a record compliance rate on the OPEC output deal, as 90% of the crude that the cartel agreed to cut was removed from the market.

While the deal has boosted oil prices, Capital Economics analysts said in a note, "we think USA production is likely to rebound and that it will be strong growth in demand that will eventually eat into stocks and rebalance the market".

"If the January level of compliance is maintained, the difference between global demand and supply implies a stock draw of 600,000 bpd, [but] It should be remembered that this stock draw is from a great height", with developed country stocks still some 300m barrels above their five-year average at the end of last year, despite five months of big drawdowns. Saudi Arabia, the IEA said, appeared to cut more than was agreed on at the meeting with some key non-OPEC members in November.

Russia's oil production cut by 300,000 barrels per day "would be phased in gradually", the IEA said.

The oil market would be re-balanced when global inventories, now near record highs, approached their five-year average level, Al Sada said.

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The IEA said that Russian Federation delivered a production cut of 100,000 barrels per day in January. Capital Economics analysts said in a note: "We think U.S. production is likely to rebound". USA shale producers, for example, are returning to the market after being hammered by collapsing oil prices in 2014.

Oil supply is expected to grow year-on-year in the first half of 2017 in large non-OPEC producers such as Canada, Brazil and Kazakhstan, BNP Paribas said in a research note this week.

According to data compiled by Bloomberg, Qatar's condensate and natural gas liquids surged past its oil production in 2010. According to information posted on the homepage of its energy ministry website, Russia's Energy Minister Alexander Novak says that the country reduced its oil production by 117,000 bpd in January.

It said that the continued existence of high stocks and market caution in assessing the level of output cuts explained why crude oil prices have remained at their current level of around $55 per barrel since mid-December.

It also remains to be seen how long rivals will put up with Iran's incessant claw back of its pre sanctions production volume: Platts reports that the Islamic republic's crude oil and condensate exports rose 3 percent month on month in January. We now do not see signs indicating that this won't happen otherwise. The figures could be revised before they are published, sources said.

Benchmark West Texas Intermediate fell more than one percent on Tuesday as markets fretted that a United States government report to be released later on Wednesday would also point to an increase in stockpiles.