OPEC + panel cuts oil demand growth forecasts
DUBAI / LONDON / MOSCOW (Reuters) – OPEC + has lowered its forecast for oil demand growth in 2021 by 300,000 barrels per day, reflecting concerns about the market recovery as further coronavirus lockdowns have taken hold install, a move that could strengthen the case for a cautious production move this week.
The joint technical committee, which advises the group of oil-producing countries that includes Saudi Arabia and Russia, met on Tuesday before a ministerial meeting on Thursday to decide on production policy.
“Despite the ongoing destocking of OECD trade stocks, they remain above the 2015-2019 average, while recognizing that the current volatility in market structure is a signal of fragile market conditions,” according to the report. JTC consulted by Reuters.
(Graph: GRAPHIC-OPEP + market balances:)
In its baseline scenario, it expects demand for oil to increase 5.6 million barrels per day this year, down 300,000 bpd from its previous forecast, according to the report.
It has also raised its forecast for global supply growth from 200,000 bpd to 1.6 million bpd.
As a result, he sees oil stocks in the industrialized world fall below the 2015-2019 average in August, a month later than expected.
(Graph: Commercial oil stocks GRAPHIC-OCDE:)
At a high-level ministerial meeting on Wednesday, known as the JMMC, the OPEC secretary general also warned of the need to exercise caution.
“We must remember that the environment remains difficult, complex and uncertain, the market volatility we have witnessed during the last two weeks of March is a reminder of the fragility of the economies and of the demand for oil,” Mohammad Barkindo said. .
The Organization of the Petroleum Exporting Countries and Allied Producers, a group known as OPEC +, are cutting production by just over 7 million barrels a day to support prices and reduce oversupply. Saudi Arabia added an additional 1 million bpd to these cuts.
Saudi Arabia is ready to support the extension of oil production limits and is also ready to extend its own voluntary cuts, a source told Reuters.
The JMMC made no formal recommendations on Wednesday, three OPEC + sources said. The options, which ministers are expected to consider on Thursday, include a postponement of production and a gradual increase, two OPEC + sources said.
Some OPEC members have expressed frustration that non-OPEC Russia and Kazakhstan have requested a small increase in production for a third consecutive month while supporting a wider renewal of the cuts, the sources said.
In a research note, JPMorgan said he believed OPEC + would proceed cautiously by largely postponing its production cuts until May and that Saudi Arabia would extend its further cut until the end of June.
“We expect the alliance will begin adding production in increments of 500,000 bpd from June through August,” the bank added.
Reporting by Rania El Gamal in Dubai, Ahmad Ghaddar and Alex Lawler in London and Olesya Astakhova in Moscow; edited by Barbara Lewis and Marguerita Choy