Middle East

OPEC + saw a resurgence in production as a sign of confidence in demand in 2022

OPEC and its allies are expected to revive more oil supplies when they meet next week, emphasizing the group’s optimism in the outlook for global demand.

The 23-country alliance, led by Saudi Arabia and Russia, is likely to pursue another modest monthly increase of 400,000 barrels per day to restore production that had ceased during the pandemic. Bloomberg Research. Several domestic delegations also said they expect a boost to take effect in February.

OPEC and its partners expect global demand to continue to recover this year with only a “mild” blow from Omicron variants. Their confidence has been verified by the congested traffic across major Asian consuming countries and the declining US oil inventories pushing up international prices by nearly $ 80 a barrel.

Bob McNally, president of consultant Rapidan Energy Group and a former White House official, said:

15 of the 16 analysts and traders surveyed Bloomberg When the coalition gathered online on Tuesday, it predicted that an increase in production would be approved. Fuel consumption indicators suggest that barrels can be absorbed, with monthly increases in mobility recorded in all but one of Asia’s major countries. Bloomberg Apple Inc until December 27th. Use statistics.

Adding supply also shows that Riyadh continues to pay attention to the inflation risk that is afflicting its biggest customers, last month’s request from US President Joe Biden for additional production to lower the price of runaway gasoline. I agreed.

The surprising move was initially read by traders as bearish, but Saudi Arabia’s Minister of Energy Abdul Aziz Bin Salman said the OPEC meeting remained technically “in session” and urgently needed. It helped strengthen market sentiment by reversing the increase in production with a positive notice.

Demand concerns

Proceeding with the next monthly increase is not without risk.

Road congestion data from local providers such as Baidu Inc. show that China, Asia’s largest oil user, shows signs of weakening fuel demand amid its relentless zero-covid approach and severe pollution. In the United States, airline cancellations are already piled up. 1,125 flights were scrubbed because cases of rising coronavirus interfered with staffing.

OPEC predicts that the global oil market is returning to the black. This will grow in the coming months as supply from Group rivals surges, including the deployment of emergency stockpiles by the United States and other consumers. With an excess projected to reach 2.6 million barrels per day in March, the group may need to reconsider further growth.

Bjarne Schieldrop, Chief Commodity Analyst at SEBAB, said:

But for the time being, the group hasn’t been particularly worried about the prospect of a stockpile rebound, the senior representative said.

Inventories are currently low and are usually replenished during the seasonal decline in demand in the first quarter, the delegation said. Inventories in developed countries are 170 million barrels below the 2015-2019 average, according to OPEC data.

Ole Hansen, Head of Product Research at Saxo Bank A / S, said: Copenhagen.

OPEC + production growth will be curtailed anyway as many countries, especially Angola and Nigeria, are struggling to increase production allowed due to investment constraints and operational interruptions. .. As a result, the actual boost in February is likely to be below the official 400,000 barrels a day, said McNally of Rapidan.

OPEC members are planning another meeting on Monday to elect a new chief executive officer. The delegation states that Kuwait’s High Sam Argais, the only officially nominated candidate to date, widely supports this position. If approved, Al Geis will replace the current Secretary-General, Mohammed Barkindo, and will end his six-year term in July.

“He is a very smart and talented analyst,” said Johannes Benigni, chairman of the JBC Energy Group, a consultant in Vienna.

https://gulfbusiness.com/opec-seen-reviving-output-in-sign-of-confidence-for-2022-demand/ OPEC + saw a resurgence in production as a sign of confidence in demand in 2022

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