Opec+ dis­cusses weaker oil de­mand out­look, Libya out­put

Gulf Times - Gulf Times Business - - FRONT PAGE -

An Opec+ tech­ni­cal com­mit­tee yes­ter­day dis­cussed higher oil sup­ply as pro­duc­tion re­sumes in Libya along with a weaker de­mand out­look due to a sec­ond wave of coro­n­avirus in­fec­tions, two Opec+ sources said.

The Joint Tech­ni­cal Com­mit­tee, which in­cludes rep­re­sen­ta­tives from key Opec+ pro­duc­ers such as Saudi Ara­bia and Rus­sia, met to re­view com­pli­ance with its global oil out­put cuts and to re­view the oil mar­ket.

Opec+ – pro­duc­ers from the Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries and oth­ers in­clud­ing Rus­sia – have been re­duc­ing out­put since Jan­uary 2017 in a bid to bal­ance the mar­ket, sup­port prices and re­duce in­ven­to­ries. They are cur­rently curb­ing pro­duc­tion by 7.7mn bar­rels per day (bpd), down from 9.7mn bpd, and are due to ta­per their pro­duc­tion cuts by 2mn bpd in Jan­uary.

But a bear­ish de­mand out­look and ris­ing sup­ply from Libya mean Opec+ could roll over ex­ist­ing cuts into next year and de­lay eas­ing the re­duc­tions, Opec+ sources say.

The group had 102% com­pli­ance with its pro­duc­tion cuts in Septem­ber, two Opec+ sources told Reuters.

At yes­ter­day’s meet­ing, Opec+ del­e­gates dis­cussed a slow de­mand re­cov­ery in the fourth quar­ter of this year, when sea­son­ally it was ex­pected to rise, one of the sources said. The re­sump­tion of oil pro­duc­tion from Libya and lack of a vac­cine for Covid-19, plus a rise in in­fec­tions and re­newed re­stric­tions to try to con­tain the pan­demic, could mean a down­ward re­vi­sion for oil de­mand, cre­at­ing a bear­ish out­look for the mar­ket in the com­ing months, this source said. The panel dis­cussed a sce­nario where de­mand would con­tract by 10.8mn bpd in 2020 and Libyan pro­duc­tion would rise, cre­at­ing an OECD stocks over­hang at 265mn bar­rels above the lat­est five-year av­er­age in the last quar­ter of this year, the source said.

For 2021, stocks would be at 301mn bar­rels above the five-year av­er­age in the last quar­ter, com­pared with 245mn, 181mn and 173mn in the first three quar­ters. Page 2

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