Opec cuts oil production by 1.1m barrels a day in January

Oil prices expected to creep higher to $60 - analysts

Global benchmark Brent Crude was up 0.97 per cent to $56.13 a barrel.

Crude oil futures were lower Wednesday morning ahead of government data that may show USA oil inventories at a record high.

Opec and other producers including Russian Federation have agreed to cut output by nearly 1.8-million barrels a day during the first half of 2017, and estimates suggest compliance by Opec is around 90%. USA crude inventories rose to the highest level since the Energy Information Administration started compiling weekly data, according to statistics released on Wednesday.

For the week ending, February 10, the EIA reported that oil stocks rose by 9.5 million barrels to 518.1 million barrels - marking a new record. OPEC ministers have said that one of the main objectives of the cut was to tackle an overhang in crude and oil product inventories that has depressed oil prices for over two years.

In all, the 10 OPEC members covered by the agreement achieved 1.14 million b/d in cuts in January, according to the Platts analysis - taking just more than a North-Dakota's worth of production off the market, though increases by the exempt countries have blunted some of the impact.

Iraq's March oil exports may decline to a seven-month low of 3.01 MMbpd, according to loading programs obtained by Bloomberg.

Gasoline production decreased last week and averaged about 9.0 million bpd. The effect of these short-term speculations and production cuts will be offset by lower demand and the increase in US shale production. Moreover, the Paris based agency has predicted that NOPEC output will grow by 0.4 percent in the current year (2017).

OPEC cuts took effect on January 1, 2017, with OPEC and non-OPEC producers agreeing to take a total of 1.8 mb/d off the market. US oil production stayed relatively flat week over week at 8.977 million barrels per day.

Despite this stated readiness to cut as much as necessary for as long as necessary, the odds are against any noticeable pickup in prices, at least until conclusive supply data becomes available. Within OPEC, all eyes will be on Saudi Arabia, the organization's largest producer and a key negotiator of the deal.

But it looks like the oil market has already priced in that decision and the high compliance and is now in a "wait-and-see" mode for evidence to what extent the supply-cut deal has been helping draw down excess global oil inventories. Crude production was reduced by 1 million barrel per day (mbpd) to 32 mbpd in January.

Non-OPEC oil supply is estimated to have averaged 57.14 mb/d in 2016, a contraction of 0.71 mb/d year on year, and representing an upward revision of 70 000 barrels per day (tb/d), driven mainly by more growth in Norway, Russia and the United States (US) in the fourth quarter of 2016.

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