Last Updated: 2017-08-12
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PARIS, France, Aug 12 (NNN-QNA) - OPEC pumped more oil in July, as global oil supplies rose for the third straight month, giving figures that cast further doubt on the cartel's pledge to cut output to raise prices.

In its monthly report on the global oil market, the International Energy Agency (IEA), said, however, that, it believes the supply glut is easing, partly because demand is growing faster.

"There would be more confidence that re-balancing is here to stay, if some producers, party to the output agreements were not... showing signs of weakening their resolve," the IEA said.

OPEC and a number of other producers, including Russia, agreed late last year, to cut production to ease oversupply and support the price of crude. In May they extended those cuts into 2018. However the effort has been undermined by a number of countries failing to honour their pledges to reduce output.

"The compliance rate with OPEC's output cut fell again in July, to a new low of 75 percent from June's revised figure of 77 percent," said the IEA.

For non-OPEC countries that joined the pact, the compliance rate edged up to 67 percent, the IEA said.

It found that the 22 countries bound by the pact are producing about 470,000 barrels per day, in excess of their commitment, while global output was around 500,000 barrels higher in July than one year ago.

"If re-balancing is to be maintained, the producers that are committed to seeing the task through to Mar, 2018, need to convince the market that they are in it together," said the IEA.

Saudi Arabia and Iraq, OPEC's top two producers, vowed to strengthen their commitment to the cuts. While Saudi Arabia met its production limits in July, Iraq only made one-third of the cut it had pledged.

IEA found that global oil supply rose by nearly half a billion barrels in July to 98.16 million barrels per day.

"Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought," said IEA, adding, "from the producers' viewpoint, strong growth reduces the stocks overhang."

The production cut deal last year was a change of strategy by OPEC, which, led by Saudi Arabia, had previously been pumping as much as it could, in order to squeeze out higher cost competitors, in particular shale oil producers in the United States.

But US shale producers have proved more resilient, cutting costs, with output now higher than before oil prices tumbled from above $100 per barrel in 2014.

While US oil firms announced cuts to investments, IEA said, it was sticking to its forecasts for output to increase further, thanks to gains in productivity.

Oil prices have swung around $50 per barrel since the OPEC-led deal came into place.-- NNN-QNA