OPEC + meeting … an attempt to revive the oil market...

The Organization of Petroleum Exporting Countries “OPEC” and its partners will meet Monday and Tuesday of this week, in an effort to revive an oil market, which is declining due to the outbreak of the Corona virus.

After a year of decline, consumption has plummeted Oil As prices fall, members may decide to extend the level of production cuts currently in place beyond January 1.

It tends the Organization of the Petroleum Exporting Countries OPEC And its allies, including Russia, are to delay a planned increase from next year in oil production, three sources close to the OPEC + group told Reuters.

OPEC + had intended to increase production by 2 million barrels per day in January – about 2 percent of global consumption – after huge supply cuts this year.

“The market expects that prices will witness a limited increase if OPEC + does what is expected and changes its planned course, by delaying the increase in supply scheduled for January,” said Bionar Tonhaugen, director of oil markets at Rystad Energy.

“While the successful distribution of the vaccine will break the link between transmission and the movement of people, even then it is likely that global oil demand will not reach its pre-pandemic levels until mid-2022,” said JP Morgan.

The growth in Libyan production is also contributing to concerns about an oversupply in the market.

Libya is a member of OPEC but the oil production cuts are not covered by them, and its production has increased by more than 1.1 million barrels per day since early September.

Cut production

OPEC countries and other producing partner countries within the framework of “OPEC +”, led by Russia, committed this year to a sharp reduction in their oil production, in an attempt to cope with the decline in the level of demand.

The agreement in effect, approved in April, provides for a reduction in production cuts from 7.7 million barrels per day currently to 5.8 million barrels per day as of January 2021, but most observers expect an extension of the current reduction to three to six. Months.

OPEC ministers have issued indications in recent weeks in this regard, and it is not expected that the good news about vaccines against the emerging corona virus will lead them to change their position.

In recent weeks, AstraZeneca, Pfizer / Biontech and Moderna laboratories have announced the high efficacy of their vaccines against Covid-19, giving hope for the recovery of economic activity, especially the transportation sector, and thus oil consumption.

However, the impact of these vaccines will not appear for several months, while OPEC decisions relate to the first quarter of 2021, and perhaps the second quarter at the latest.

Control over the display

While OPEC + closely monitors oil prices that have returned to pre-epidemic levels, with the world’s benchmark oil prices in Brent North Sea and West Texas Intermediate reaching $ 45 to $ 50 a barrel, it is also tracking production data from outside the organization, and the levels of storage capacity in the world. .

And the supply of the United States, the number one product in the world, has been declining since it reached its historical record levels at the beginning of the year, reaching 11 million barrels per day. Also, the election of Democrat Joe Biden, who carries a limited project with him to actually reduce shale oil production in his country, suggests that the peak of US oil production is in the past.

Oil prices were mixed on Friday – the close of the previous week – but gained for the fourth week in a row ahead of the OPEC + meeting.

Brent crude futures for January delivery rose 38 cents, setting the settlement price at $ 48.18 a barrel, while the more active February contract increased 46 cents to $ 48.25.

However, West Texas Intermediate crude fell 18 cents to close at 45.53 dollars a barrel, and Brent rose 7.2 percent over the past week, while West Texas increased 8 percent.