Oil prices fell below the $50 mark on Tuesday, after an OPEC report revealed that Saudi Arabia's production increased above 10 million barrels per day in February, boosting production by 263,300 barrels.
Oil prices flirted with a three-month low on Monday (14 March), as Opec's efforts to curb production were undermined by an increase in United States inventories and drilling activity. Crude prices have erased most of the gains made since the Organization of the Petroleum Exporting Countries announced supply curbs on November 30, followed in December by an announcement that a number of non-OPEC producers would join the cuts.
"The market needs time for the full impact of the big supply cuts under the output reduction agreements to be felt", the IEA said.
This three-month chart shows how quickly oil prices have fallen on the NYMEX exchange. Prices rose 89 cents to US$51.81 yesterday.
"For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve", the IEA said in its monthly report.
OPEC and 11 non-OPEC producers agreed in November to curtail their collective crude oil output by nearly 1.8 million barrels per day (bpd) between January and June, with OPEC shaving off around 1.2 million bpd, and non-OPEC producers - led by Russian Federation - slashing another 558,000 bpd.
Prices rose in February after a landmark deal between OPEC members and some non-members gained traction, the Organisation of the Petroleum Exporting Countries said in its monthly oil report.
That figure, submitted by Riyadh, jarred with OPEC's own estimates, which showed Saudi production falling further last month to 9.8 million barrels a day.
In the same report, the cartel reiterated a forecast for oil supplies from outside its ranks to fall by 660,000 barrels a day in 2017 to 57.34m b/d.
Although OPEC states have been complying with supply curbs, led by Saudi Arabia, it has not been enough to overshadow a rise in USA inventories to a new high. As OPEC compliance comes under scrutiny once more, hark, here are five things to consider in oil markets today. The IEA estimated an average 1.5 million b/d of oil went into storages in January, and warned that the huge glut built up globally since 2014 would take longer than expected to ease. It had been hailed as the de facto end to a two-year price war that had pushed crude from over $100 a barrel to under $30 at its low point a year ago.
He said, "the market clearly believes that there are cracks in the Saudi commitment to the production cut deal".