OPEC plus inches closer to delaying output hike

Crude recouped losses as new of talks emerge

OPEC plus inched closer to delaying its January output increase, with Russia actively discussing keeping its current curbs for an extra three months as oil markets weaken.

The producer group, led by Russia and Saudi Arabia, has been dropping hints for weeks that its plan to add almost two million barrels a day to oil markets next year may not be such a good idea as the demand recovery falters.

Since Russian President Vladimir Putin first said he was open to a delay, the outlook has worsened. France, Germany and the U.K. are going back into lockdown to curb the spread of the virus, while the U.S. has been seeing record numbers of daily cases.

Oil slumped 10 per cent in London last week, with traders seeing signs of weaker demand, just as a peace deal in Libya floods the market with additional supplies. Crude futures dipped another five per cent in the early hours of Monday, dropping to almost $35 a barrel, but recouped those losses as news emerged from Moscow.

On Monday, Russian oil companies discussed with Energy Minister Alexander Novak the possibility of delaying the easing of OPEC plus output cuts by three months, said people familiar with the matter.

There were also talks about potentially deepening the current curbs by the Organization of Petroleum Exporting Countries and its allies, but that was not considered to be the base case, said one person. The main focus was a possible delay, the people said.

No final decision was made at the meeting and the nation “hasn’t prepared its official position,” Deputy Energy Minister Pavel Sorokin said later on Monday at the Moscow Exchange Forum.

Russia will do that after Nov. 17, when the OPEC plus joint ministerial monitoring committee will meet for a discussion, he added.

OPEC plus agreed in April to remove 9.7 million barrels a day from the market, a deal that boosted prices out of a historic slump caused by the coronavirus pandemic.

As the global economy recovered, the group eased those curbs by two million barrels a day in August.