Renewed drilling by US oil producers is keeping a ceiling on a global crude price recovery, cutting into the impact of deep reductions by other major producers, OPEC said today.
In its latest oil market report, the Organisation of the Petroleum Exporting Countries said its members last month reduced output by 890,000 barrels per day according to secondary sources.
The International Energy Agency said last week that the initial rate of compliance with a landmark deal to reduce the global oil glut was 90 per cent.
The deal, agreed last year and in effect since January, called for the OPEC cartel and some non-OPEC countries to reduce output by about 1.8 million barrels per day (mb/d).
The oil price gained 73 cents in January from December to USD 52.40, according to the OPEC's reference basket, but would have risen more if the oil price recovery had not attracted high-cost American producers back to the market, OPEC said.
"Production adjustments by OPEC and some non-OPEC producers supported the market, although gains were capped by increased drilling activity in the US," it said.
Among OPEC members, crude output decreased the most in Saudi Arabia, Iraq and the United Arab Emirates, while Nigeria, Libya and Iran increased production.
The world's total oil supply fell by 1.29 mb/d in January, OPEC said citing preliminary data. OPEC's share in total production stood at 33.5 per cent.
Meanwhile, OPEC revised upwards world oil demand growth for 2016, saying it was now estimated at 1.32 mb/d and expected to continue strong this year, at 1.19 mb/d.
This means the world's oil markets will continue to rebalance, OPEC predicted.
"In 2017, oil demand growth is assumed to remain healthy with potential growth estimated at 1.2 mb/d, well above the ten-year average of 1.0 mb/d," the organisation said.
Main factors supporting the scenario are strong global economic growth, solid demand from the road transport sector, and expectations for high vehicle sales in the US, Europe, China and India.
Dampening demand will be progress made in fuel efficiency, potential reduction in subsidies for oil purchases and switches to other fuels, OPEC said.
US benchmark West Texas Intermediate was down nine cents at $53.77 a barrel on Monday while Brent North Sea slipped five cents to $56.65.
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