It is a good day for OPEC.
Data released by Cartoon Oil on Monday show that its members have largely complied with the production cut deal.
The confirmation confirms a great year for OPEC, which had to plan to raise prices after falling to $ 26 a barrel in February 2016.
The price collapse – to levels we had not seen since 2003 – was due to months of increased supply, a slowdown in demand from China, and a decision by Western powers to lift Iranian nuclear sanctions.
Since then, the market has undergone an amazing transformation, as crude oil prices have doubled to trade at $ 53.50 a barrel.
Here’s how the major oil producers work together to push prices up:
OPEC agreed to major production cuts in November, hoping to calm the global supply of oil and support prices.
News The deal immediately boosted prices At 9%.
Investors cheered more after several non-OPEC producers, including Russia, Mexico and Kazakhstan, joined the effort to curb supplies.
Crucially, the deal was suspended. The OPEC report published on Monday showed that its members – in most cases – fulfilled their pledges to cut production. The International Energy Agency agrees: OPEC has estimated Commitment For the month of January, it increased by 90%.
UAE Energy Minister Suhail Al Mazrouei told CNNMoney on Monday that the results were better than expected.
Total production is 1.8 million barrels per day and is scheduled to last for six months.
Investors are optimistic
The OPEC deal took months to negotiate, and investors really liked it. The number of hedge funds and other investment institutions betting on price increases hit a record high in January, according to OPEC.
Widespread optimism increases fuel prices.
The latest data from OPEC and the International Energy Agency show that global oil demand was higher than expected in 2016, thanks to stronger economic growth, higher auto sales and cooler weather than expected in the fourth quarter of the year.
In 2017, demand is expected to increase to an average of 95.8 million barrels per day, compared to 94.6 million barrels per day in 2016.
The International Energy Agency said that if OPEC abides by its agreement, the global oil glut that has afflicted the markets for three years will It finally disappears in 2017.
Despite the impressive growth, analysts warn that prices may not go up significantly.
This is because high oil prices are likely to attract US shale producers to the market again. The total number of active oil rigs in the U.S. reached 591 last week, according to data from Baker Hughes. This 152 over a year ago.
US crude stocks swelled in January to nearly 200 million barrels above their five-year average, according to the OPEC report.
“This huge increase in stocks is the result of a strong response from American rock producers, who did not participate in the OPEC agreement and who instead used the resulting price hikes to increase production,” said Fiona Cincotta, an analyst at. City index.
More supply could put OPEC again under pressure.
CNNMoney (London) It was first published on February 13, 2017: 9:13 AM ET