The OPEC oil market report for the month of May acknowledged a fact which astute investors in the oil sector have long known to be true, namely the cartel is losing power. A surge in U.S. output which is dominated by oil shale led to OPEC raising estimates for non-OPEC growth by 370,000 barrels per day (bpd) from April’s estimates. This represented a 64% rise from April’s projections and growth of 950,000 bpd from the previous year. This outlook marks a dramatic departure from the cartel’s estimates for growth in the U.S. just 6 months ago when production cuts were first announced last November.

An unbiased review of OPEC’s own report also casts doubt as to the effectiveness of the production cuts with OPEC’s crude output declining by just 2,000 bpd in April to 31,732,000 bpd. While some members of OPEC did reduce output this was largely offset by increases from other OPEC members. Libya which is exempted from the production cuts reduced its output by 62,000 bpd. Simultaneously, Saudi Arabia which is the leading advocate of production cuts, increased its output by nearly 50,000 bpd. This brings the oil rich kingdom to it’s highest levels of production since January. Additionally the African nation of Angola increased it’s output by nearly 100,000 bpd.

Despite apparent lack of success which OPEC has seen in steering the price of oil back into territory it finds acceptable, the cartel seems determined to stay the course. This despite the fact that even in their own optimistic projections for growth in demand, OPEC acknowledges that non-OPEC nations will be able to supply most of the projected increase in demand.

“For 2017, oil demand growth is anticipated to be around 1.27 mb/d unchanged from the previous report with total oil demand expected at 96.38 mb/d. Non-OECD will continue to lead growth at 1.04 mb/d, while OECD continues to grow albeit at a reduced pace of 0.23 mb/d”

Say what you like about OPEC but those guys aren’t quitters (and U.S. shale producers doubtless appreciate their tenacity).