In my December 2016 update, I wrote that I expected oil prices to be more stable in early 2017. Oil prices have been relatively stable so far, with WTI prices hovering over $50 per barrel. I further mentioned that I did not expect significant oil production cheating. OPEC and non-OPEC countries that are participating in the oil production cuts have shown solid compliance so far.
From my review of various news sources, the views of analysts and traders range from optimism where production cuts will make a meaningful difference to pessimism where increased drilling in shale plays will offset production cuts. The next few weeks will gauge the effectiveness of the production cuts in reducing worldwide oil inventories against the rate of oil production increases.
My expectation is that during the next few weeks, oil production cuts will continue to support current prices while the concerns about increased production will keep oil prices capped below $60 per barrel.