OPEC+ sees greater 2022 surplus, dangers to grease demand progress

The brand of the Organisation of the Petroleum Exporting International locations (OPEC) sits exterior its headquarters forward of the OPEC and NON-OPEC assembly, Austria December 6, 2019. REUTERS/Leonhard Foeger

LONDON/MOSCOW, Aug 31 (Reuters) – The oil market will doubtless see a bigger-than-expected surplus this 12 months, OPEC+ mentioned in a report on Wednesday, as rising vitality prices and tighter financial coverage exert downward strain on oil demand.

The report comes days forward of an OPEC+ coverage assembly on Sept. 5 and over per week after OPEC chief Saudi Arabia mentioned the group might minimize oil output. learn extra

The Joint Technical Committee (JTC), which meets on Wednesday, advises the Group of the Petroleum Exporting International locations and allies led by Russia, collectively referred to as the OPEC+ group of oil-producing nations, on market fundamentals.

OPEC+ is able to minimize output amid volatility within the oil futures market, pushed by skinny liquidity and a disconnect with bodily markets, Saudi Power Minister Prince Abdulaziz bin Salman mentioned final week. learn extra

5 sources advised Reuters that discussions are but to start on manufacturing coverage past September and whether or not the producer group would minimize output.

Oil costs have been extraordinarily unstable in current weeks. Whereas Prince Abdulaziz’ feedback helped propel costs to one-month excessive above $105 a barrel on Monday, Brent crude on Wednesday traded $10 a barrel under these ranges, on expectations for decrease demand.

At its final assembly, OPEC+ agreed to boost manufacturing targets by 100,000 bpd for September, having unwound file cuts of about 10 million bpd that it agreed in 2020 to assist counter the impression of the pandemic.

The JTC report mentioned oil demand – which it sees rising 3.1 million bpd this 12 months – faces main uncertainties notably from rising inflation and tightening financial coverage that are consuming into customers’ budgets.

“Rising vitality costs pose one other danger going ahead,” the report mentioned. “The latter might result in a extra important discount in consumption than at present anticipated, particularly in the direction of the top of the 12 months.”

The JTC sees the oil market surplus this 12 months reaching 900,000 barrels per day (bpd), up 100,000 bpd from its earlier forecast, a report by the committee seen by Reuters confirmed.

Beneath its base case state of affairs, the JTC sees the oil market in a surplus of three.1 million bpd in September, falling to 0.6 million bpd in October earlier than rising to 1.4 million bpd in November.

OPEC+ additionally expects a surplus of 900,000 bpd subsequent 12 months below its base state of affairs, the JTC’s report confirmed.

(This story was refiled to repair typo in headline)

Extra reporting by Maha El Dahan in Dubai and Rowena Edwards in London; enhancing by Jason Neely and Bernadette Baum

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