Estimates indicate that compliance with the cuts is about 90%, while Reuters reported last week that Opec could extend the pact or apply deeper cuts from July if global crude inventories failed to drop enough.
Although U.S. production doesn't have the potential to offset the production cuts of 1.8 million barrels from 24 countries, the physiological impact of higher than expected growth in U.S. production will continue to hinder the potential rally in prices.
Worldwide investment in the development of oil and gas resources from 2015 to 2020 will be 22 per cent, or $740 billion, lower than anticipated before prices plunged in 2014, with the deepest cuts in the US, Wood Mackenzie said in a report on Wednesday.
However, FXTM Research Analyst Lukman Otunuga said concealed concerns of USA shale boosting oil production and negatively impacting Opec's efforts could create some headwinds in the future.
The energy sector gave markets a boost as crude oil prices rallied to almost three-week highs. "The market's been looking for that, if not demanding that, at this point". From December to January total Opec production fell by 1 million barrels/day. The price of March futures for West Texas Intermediate (WTI) oil grew by 1.07 percent to $53.97 per barrel.
Despite all the action taken so far, supplies are high and the inventories remain bloated, especially in the United States.
The OPEC cuts, however, have spurred a speculative move into crude oil that has pushed prices towards the top of their recent ranges that might prompt a correction. This is taking place despite record crude and gasoline inventories in the US and signs that production may continue to increase over the near-term. Nigeria's Mohammed Barkindo is the Secretary General of the OPEC. Iraqi Prime Minister Haider Al-Abadi said oil prices need to reach $60 a barrel to fill budget gap, yet current prices are far better than those of two years ago.
"Annual average USA production would increase by 130,000 bpd year over year on average in 2017".
While U.S. barrels still make up more than half - 54 per cent - of all Canadian oil imports, NEB chief economist Shelley Milutinovic said that American imports have begun to fall and have been replaced with oil from other sources.
Signs that OPEC's agreement is holding have been countered by data showing that US crude oil and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened.