The production cut does not look to be as fluid as the oil commodity.
Oil futures started the week on a back foot as prices were seen tumbling amid investors’ growing concerns on the effectivity of the deal to curb output agreed last month.
International benchmark, Brent crude futures, shed 23 cents and was last trading at $55.22 per barrel while the West Texas Intermediate slipped 21 cents to finish at $52.16 per barrel.
Oil futures surged sharply last December after the members of the Organization of Petroleum Exporting Countries has reached a pact to cut production by 1.2 million barrels per day to 32.5 million bpd in an attempt to address the persistent global supply that dragged down prices in more than two years.
But even when the leading members of the union, including Saudi Arabia, Iraq and Kuwait, started cutting output for the past few weeks, doubts were still casted on ability of the pledged production to eliminate global glut as other producers have yet to become so vigilant.
Meanwhile, adding more pressure and sowing more fears to the investors were the recent comment from the Saudi Arabian minister about the conclusion of the supply-cut deal and the rising production in the US.
On Monday, Khalid Al-Falih said in Abu Dhabi that the bloc was unlikely to continue the deal beyond June considering the level of compliance and the expectations of demand, which may result to rebuilding surpluses according to experts.