The OPEC deal and the non-OPEC deal that was agreed last year and are being implemented since January this year to reduce production by as much as 1.76 million barrels per day continue to be undermined by the rise in the US production. After bottoming in July last year to 8.428 million barrels per day, the production in the United States has been rising ever since. As of the week ending 17th February, the US production has reached more than 9 million barrels per day.

The production was rising well before the OPEC deal and since the OPEC deal, it is up by almost 7 percent from 8.7 million barrels per day. Since the decline in oil price in the summer of 2014, the shale oil companies in the United States have been in a drive to cut costs and they are now on a level playing field where they can compete with traditional sources of oil from the Middle East and places. They can compete to as low as $40 per barrel with the OPEC producers.

If the production continues to rise at the same pace, by June this year, the US production would reach new heights. It is about the time the OPEC leaders would convene in Vienna to discuss the renewal of the deal. As of now, the WTI is currently trading at $54.2 per barrel and Brent at $2.6 per barrel premium.