The ongoing discussion since mid last week about coordinated production cuts by Russia and OPEC saw oil prices close the trading week on Friday with significant gains. Brent was at one point trading at USD 36 per barrel, its highest level in 3½ weeks and closed 8% higher last week, and as much as 20% in the last two weeks.
However, surveys published by Reuters and Bloomberg on Friday show that OPEC is still producing much too much oil. According to Reuters, OPEC production rose in January by 290,000 to 32.6 million barrels per day, and Bloomberg data showed rise by 48,000 to 33.1 million barrels per day. This is the highest production volume for some years, even excluding Indonesia, OPEC member again since December. Also Reuters data showed that Iran has increased its output by 250,000 barrels a day since the sanctions have been lifted.
Weak China PMI data has resulted in oil prices shedding a good 2% since the markets opened on the day. Given the OPEC production levels, it is doubtful that oil will recover further from these levels any time soon.
