March 6 (UPI) -- While compliance with an OPEC-led agreement to curb production is strong, the way the deal was configured reveals output above a threshold, a survey found.
A survey from S&P Global Platts found members of the Organization of Petroleum Exporting Countries produced 32.1 million barrels of oil per day in both January and February. That's 400,000 barrels below a threshold level set in a November deal designed to offset supply-side strains that were keeping crude oil prices low.
Of all the member states taking part in the agreement, Platts found compliance was 98.5 percent in February, up from the 91 percent reported in January.
OPEC Secretary-General Mohammad Barkindo touted compliance during a state visit to Nigeria, saying that, when counting non-member states, there are two dozen countries committed to bringing the market back toward balance.
"These positive indicators are leading to better short- and medium-term perspectives for the market, in particular for investment," he said.
OPEC's decision helped establish a floor under crude oil prices of $50 per barrel, though oil has traded in a narrow band around $55 per barrel for most of the year. Though compliance is strong, and getting stronger, Platts found the devil may be in the details.
"Under the agreement, OPEC pledged to cut 1.2 million barrels per day for six months and freeze production at around 32.5 million barrels per day, including Indonesia, which suspended its membership in November and is not included in the Platts survey," its report read. "Adding in Indonesia's typical 730,000 barrels per day of production would take the producer group about 340,000 barrels per day above its ceiling."
Saudi Arabia, the de facto leader of OPEC, is contributing the most in terms of volume. Iraq, which balked at the deal initially, is about 91,000 barrels per day above its quota, even after cutting production in February.
Libya and Nigeria, meanwhile, are exempt from the agreement so they can rely on oil revenue to combat threats to national security. Nigerian production is recovering as is Libya's, though the latter has seen an uptick in violence in and around key oil regions.
OPEC's deal set a floor price for crude oil, though improved the market enough so that energy companies could return to work in more expensive areas like U.S. shale. Federal and industry estimates show a steady increase in total crude oil production and more spending on exploration and production.
U.S. crude oil production and previous OPEC policies designed to defend a market share through higher output helped tilt the market toward the supply side, which pushed crude oil prices below $30 per barrel last year.