Opec and its allies have agreed to revive more stagnant production as the outlook for the global oil market has improved and demand has become more or less tolerant of new coronavirus variants.
According to a statement, a 23-country alliance led by Saudi Arabia and Russia approved an increase of 400,000 barrels a day scheduled for February at a meeting yesterday. The group is sticking to plans to gradually recover production that had stopped during the pandemic after analysts forecast a lower surplus this quarter than previously expected.
Global fuel consumption continues to recover from the collapse of 2020. Traffic and factory activity have increased across major Asian consumers, crude oil inventories have declined in the United States, and oil prices have risen to nearly $ 80 a barrel in London.
Opec + has already resumed about two-thirds of production that was shut down in the early stages of the pandemic. They are trying to satisfy the recovery in fuel consumption and drip feed the rest at a pace to stop the surge in inflation prices, without plunging the market into a new slump.
Given that some members, such as Angola and Nigeria, have recently struggled to reach their production goals, it is questionable whether OPEC + can actually provide full monthly increments.
According to Amrita Sen, chief oil analyst and co-founder of Energy Aspects Ltd, just 130,000 barrels of additional Opec + crude oil per day could hit the market in January and per day in February. It is said that 250,000 barrels will continue.
“Even with 400,000 headlines, only half of them are on the market, and probably less,” Sen said in an interview with Bloomberg TV before the Opec + conference. rice field.
OPEC and its partners expect a supply surplus this month, which seems to be smaller than previously thought. Rising price premiums on short-term Brent crude oil futures against late contracts suggest that the market remains tight.
The Group’s Joint Technical Committee announced on Monday that production will exceed global demand by 1.4 million barrels per day, compared to 1.9 million barrels in the previous assessment.
According to the delegation, fuel inventories are currently low and are usually replenished during seasonal declines in demand, so the alliance is not concerned about adding barrels in excess. According to JTC, developed country stockpiles are 85 million barrels below the average as of November 2015-2019.
Proceeding with the next monthly increase is not without risk for the producers’ alliance.
Last week’s air travel in the United States caused a great deal of confusion, with more than 1,300 flights canceled on Friday and 1,000 scrubbed on Saturday. This is because the airline was suffering from a staff shortage associated with the coronavirus infection.
Road congestion data from local providers such as Baidu Inc. show that China, Asia’s largest oil user, is showing signs of weakening fuel demand due to its relentless zero-covid approach and severe pollution lines. GoldmanSachsGroup Inc is preparing to host the Beijing Winter Olympics and a series of political events that the country expects to maintain, so there will be border restrictions for the rest of the year.
And while Opec analysts expect the first quarter to be tighter, most of the previously expected surpluses have been postponed to later this year. The group has stated several times that it has the option of suspending or canceling planned supply increases as needed.
http://www.gulf-times.com/story/707423/Opec-agrees-to-revive-more-production-as-market-lo Opec + agrees to revive more production as the market is tight