Oil prices fell today as doubts emerged that crude production cuts would curb a global surplus of fuel supply.
The Organisation of the Petroleum Exporting Countries (Opec) revealed in November it would aim to cut production by 1.2m barrels a day from the first of the year, but today delegates told Reuters it is unlikely to deliver its full target.
Opec aims to cut production to remove the global oversupply and prop up low prices that are hurting the revenue of exporting nations.
Brent crude futures, the international benchmark for oil prices, was trading at $55.87 per barrel earlier this morning, down 14 cents from the last close, while West Texas Intermediate (WTI) crude was down nine cents to $52.92 per barrel.
Opec said compliance of 80 per cent would be good and as low as 50 to 60 per cent is acceptable.
Saudi Arabia buoyed prices earlier this week as it said its output had fallen below 10m barrels per day (bpd). Saudi Arabia and Kuwait said yesterday they had cut production by more than they committed to.
But hard evidence of export reductions has yet to emerge. According to Reuters, many analysts predict compliance of 50 to 80 per cent to the voluntary agreement at best. Based on statements by producing nations so far, there has been more than 60 per cent compliance.
With the last Opec cuts in 2009, compliance peaked at about 80 per cent, according to the International Energy Agency. That lifted prices up from $46 per barrel to $69 per barrel.