OPEC Cutback Compliance of 120 Percent Fails to Galvanize Market

Traders on Monday are seemingly more concerned about news out of the U.S. and Iraq. File Image / Pixabay

Once more, positive news coming from the Organization of the Petroleum Exporting Countries (OPEC) - this time in the form of compliance reportedly exceeding 100 percent in September -  failed to inspire much market interest on Monday, with West Texas Intermediate climbing just 6 cents to $51.90 and Brent falling 39 cents to $67.36 per barrel.

The lukewarm performance caused Stewart Glickman, head of energy research at CFRA Research, to remark that "It seems like there's an awful lot of competing drivers ... and crude seems confused.

"Volatility has actually been tame and there's no sustained trend lately that can break us out of this $45-$55 a barrel range."

Glickman is referring to seemingly more substantial market influences than familiar OPEC patter, namely Baker Hughes data showing the number of U.S. rigs drilling for new oil falling by seven to 736 in the week to October 20 (the lowest level since June), and crude oil exports through the Iraqi Kurdistan controlled-pipeline to the Turkish port of Ceyhan hovering at about 288,000 barrels per day (bpd) on Monday, when the normal amount is about 600,000 bpd.

For the record, OPEC's joint ministerial committee responsible for monitoring the cartel's production cutback agreement stated that producing countries achieved a record-high conformity level on their voluntary production adjustments at 120 percent in September.

The committee added that commercial oil stocks now stand at 159 million barrels above their latest five-year average, and that it "will continue to monitor other factors in the oil market and their influence on the ongoing market rebalancing process.

"All options are left open to ensure that every effort is made to rebalance the market for the benefit of all."

More news that presumably had a negligible effect on traders was Saudi Arabia state media noting that the Saudis and Iraq have expressed satisfaction with "the orientation" of the global oil market towards recovery as a result of OPEC's cutbacks.

No word yet on any progress the Saudis and Russia may be making with regards to consulting other countries as a reported overall push by OPEC to obtain membership consensus to extend its reduction deal in advance of its formal November meeting in Vienna.