As representatives from OPEC and non-member nations are currently gathered in Abu Dhabi to discuss poor conformity levels on their output cut agreement, oil futures edged down 1.3% to under $49 per barrel on Monday, on concerns about major oil producers’ wavering commitment to output caps.
On the New York Mercantile Exchange, crude futures for delivery in September CLU 7, -1.17% were recently down 64 cents, or 1.3 percent, to $49.94 a barrel in the Globex electronic session. October Brent crude LCOV& -1.16% on London’s ICE Futures fell 71 cents or 1.3 percent to $51.72 a barrel.
One major development the market will be watching for from the OPEC meeting is if Libya will join the agreement to cap output. The Africa supplier, alongside Nigeria, were exempted from the initial deal because their outputs were marred by months long militant attacks.
However, now that both nations are pumping closer to their peak levels, there is a growing view that they should also abide by production caps. Nigeria last month voluntarily agreed to cap its output to 1.8 million barrels a day.
The combined July output of both African producers, according to S&P Global Platts, was 590,000 barrels above October’s – baseline that deal participants used to determine their production caps. The OPEC’s own official monthly report will be published on Thursday.
The meeting to be co-chaired by Kuwait and Russia will discuss members’ compliance level to the output pact the cartel inked with 10 other oil suppliers, including Russia, in late 2016. The deal so far hasn’t produced meaningful effects to tamp down global output or inventories.
According to Bloomberg data, compliance fell to 86 percent in July, the lowest level since January.