U.S. crude inventories rose to a historical high last week, increasing by 1.5 million barrels to 520.2 million barrels, according to data by the U.S. Energy Information Administration.
OPEC has chose to produce 1.8 million barrels less per day to end the global oil oversupply.
However, some data other than the production numbers suggest that the Kingdom might be bypassing the OPEC deal by other means.
But the weekly estimates normally provide an accurate indicator for trends in the more comprehensive monthly data (tmsnrt.rs/2mcZphb).
According to data for the month of January, OPEC is in nearly full compliance with the deal.
Rising output also helps explain the big increase in USA crude exports and the continued high level of domestic crude stocks. On the contrary, USA crude stocks have risen 39 million barrels this year, to 518 million, since OPEC started cutting production in January.
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US crude prices have roughly doubled over the previous year which has supported a sharp expansion in domestic drilling activity.
The main reason for the potential fuel price rally is still the production cuts by the OPEC members and Russian Federation to balance the oversupplied fuel market.
"There seems to be a consensus within OPEC that the optimal crude oil price is as near as possible to the upper line of our shale band price range ($40-60 a barrel) but not significantly above", Olivier Jakob, a strategist at consultant Petromatrix, told Reuters. Recent rising inventories in the US and the talk that OPEC might be prepared to extend the production cuts beyond the initial expiry date at end-June support an assumption that the global inventory drawdown may not come as early as it was expected.
Kazakhstan over fulfilled its obligations to cut oil output within the deal with other oil producer countries reached in December 2016, Sputnik Kazakhstan news agency quoted Kazakh Energy Minister Kanat Bozumbayev as saying.
In the end, however, OPEC will be faced with a familiar dilemma: sacrifice market share to protect prices or defend market share and allow prices to find their own level. "You are looking to capture market share at the expense of profit".
Since the end of 2016, OPEC has switched tack and has been willing to sacrifice market share to push prices up.
Meanwhile, Kazakhstan announced that it has over fulfilled its obligations to cut oil output. There is not a lot of spare production capacity by historical standards, and after the OPEC cuts are unwound, there will probably be a gradual increase in output, which will thin capacity out even more.