Opec+ is still weighing its options to extend current production curbs until the first quarter of next year as the group awaits key producers' backing.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said the group is prepared to be flexible but noted following the joint ministerial monitoring committee meeting that the market was “too fluid” to take an immediate action to extend supply cuts.
Overall compliance among the group in October was 101 per cent, lower than the previous month’s 102 per cent.
However, producers such as the UAE, which made compensatory cuts last month, reported 126 per cent compliance with the agreement.
The UAE lowered its crude output by 153,000 barrels per day in October in line with the restrictions, state-run Wam news agency reported on Tuesday.
Opec+, the alliance led by Saudi Arabia and Russia, is drawing back 7 million bpd since August and was set to taper the cuts from the beginning of next year, as part of the agreement reached earlier this year.
However, a rising number of Covid-19 cases and subsequent reimposition of lockdowns in several parts of the world have raised concerns about the demand for crude.
"All participating countries need to be vigilant, proactive and be prepared to act, when necessary, to the requirements of the market,” the JMMC said in its joint communique on Tuesday.
The core group cautioned about demand being affected by "stringent Covid-19 containment measures” that continue to elevate risks and uncertainties.
Prince Abdulaziz called the recent developments in the efficacy of vaccines "as some glimmer of light at the end of the tunnel” but noted that the news was counterbalanced by the recent surge in cases.
He also urged the laggards in the group to comply with supply cuts.
"We as a group, do not want to give the market, any excuse to react negatively. The market will not be kind to those who do not stick to agreements,” he told the delegates.
However, prices remained deflated due to lack of clear guidance over whether Opec+ has the full backing to rollover the current level of cuts for the next three months.
Brent, the international benchmark, was up 1.03 per cent, trading at $44.2 per barrel at 2.06pm. West Texas Intermediate was up 0.82 per cent at $41.77 per barrel.
"Oil markets failed to take much heart from the Opec+ JMMC overnight as ministers from some of the most important producers didn’t fully back a deal to extend production cuts in to 2021,” Emirates NBD said in a note on Wednesday.
Crude stocks in the US also increased, with the industry-funded American Petroleum Institute reporting a buildup of around 4.2 million barrels last week, along with higher stocks of gasoline.
Swiss bank UBS expects JMMC to delay the production increase of 2m bpd scheduled for the beginning of next year to be delayed by a few months.
“As we expect the oil market to stay undersupplied in 2021, we continue to recommend investors with a high risk tolerance to sell Brent's downside price risks,” said Giovanni Staunovo, commodity analyst at UBS.