Oil producers are failing to raise their outputs in line with agreed targets established by the Organisation of the Petroleum Exporting Countries and allies such as Russia (OPEC+).
Despite OPEC+ committing to increasing oil production by 400,000 barrels per day (per day), the International Energy Agency (IEA) revealed this week that the group missed its overall targets by 790,000 barrels bpd last month.
Two sources from the producer group told Reuters that OPEC+ that compliance with oil production cuts rose to about 122 per cent in December.
This compares with 117 per cent in November.
Compliance from members of OPEC was at 127 per cent in December, while non-OPEC producers in the wider alliance achieved a compliance of 114 per cent, the sources said.
Members such as West African producers Nigeria and Angola struggled to raise output, while major producers like Saudi Arabia have refused to make up the shortfall.
However, production is expected to increase across the wider market, with the world’s biggest developer reporting rebounds in supplies.
The US has recently reported a boost in its overall inventories, with the IEA still expecting a surplus this of global supplies this quarter.
The developments have stalled rallies on both major oil benchmarks after strong rallies this month amid initially tightening supplies.
Brent Crude is currently priced at $87.49 per barrel, with WTI Crude hovering at $85.14.
There is considerable debate about whether prices will reach $100 this year.
Both OANDA and Goldman Sachs have presented a more bullish case based on future supply shortages and inflationary pressure, while Saxo Bank is less optimistic about future market rallies.