In May this year, OPEC producers and 11 participating non-OPEC countries including Russia formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension. The new agreement extends the production deal for nine months until March 2018. However, the latest oil market report from OPEC showed that production increased by 173,000 barrels per day in July, after rising by 396,000 barrels in June and by 366,000 barrels per day in May, thanks largely to two exempted countries, Libya and Nigeria.

International Energy Agency (IEA) in its monthly oil market report indicated that it is not just Libya and Nigeria but the participating countries have produced almost 470,000 barrels of crude per day, beyond the agreed level. While Libya and Nigeria are exempt from the deal, the other OPEC members are not doing whatever it takes to clear the glut.

According to the IEA MOMR, the compliance within the OPEC has declined to 75 percent in July, whereas YTD compliance with the deal remains at 87 percent. The compliance outside the OPEC is even worse at just 67 percent.

As the news of higher production continues to hit the market, both WTI and Brent benchmarks have been giving up some of the gains. WTI is currently trading at $48.5 per barrel, while Brent is at $3.2 per barrel premium to WTI.