1. Can't tell for sure from your photos but looks to me as if a fitting has been inserted into the end of the pipe, presumably soldered.
2. I've quite often found these fittings, which are designed for end feed soldering, often offer a slack fit for a compression fitting.
3. You might try swapping that brass olive for a copper one. The copper is softer and may offer more compression onto the pipe (fitting?).
4. The previous olive was clearly don up far too tight and has constricted the pipe.
5. If you want a "proper" solution:
5.1 Clean all the paint off the pipe above that dent near the towel.
5.2 Cut the pipe at the current paint line.
5.3 Use a coupler (end feed or solder ring) and a small piece of 15 mm pipe (assuming it is all 15 mm) to extend the pipe upwards. Requires soldering and a drained system.
5.4 Attach the valve. I'd personally still swap the brass olive for a copper one. With a new valve, new compression nut (comes with valve) and new olive, shouldn't need any sealing paste, but won't hurt.