OPEC wants oil inventories back at normalized levels, and that is not happening, the director of research at ClipperData told CNBC.
Matt Smith said two factors are contributing to OPEC’s problems. In the U.S., production is returning and inventories are at record highs. Then there is recent data from the Energy Information Administration and OPEC.
“So prices have just kind thrown in the towel in the last week,” Smith said on “Squawk Box.”
On Wednesday, oil prices were trading higher, after hitting a three-month low earlier in the week. Data on Tuesday showed that oil inventories had risen despite the deal to cut supply.
Brent crude was trading 1.85 percent higher on Wednesday morning at $51.86 a barrel, while WTI was up by 2 percent at $48.71 a barrel.
OPEC said in its monthly report that its biggest producer, Saudi Arabia, had raised its output in February by 263,000 barrels per day to 10 million barrels per day.
In an effort to dispel market concerns, the Saudi energy ministry said the “difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month-to-month variables.”
“I think we’ll get a bounce here in the short term today,” Smith said. “We’re seeing lower imports and a draw coming through. We’re bouncing from key support now. It’ll depend over the next couple of months whether OPEC implements those cuts.”