BAKU, Azerbaijan, March 11
By Leman Zeynalova – Trend:
The US Energy Information Administration (EIA) no longer expects active production management by OPEC, Trend reports citing the March Short-Term Energy Outlook released by EIA.
The outcome of the March 6 OPEC meeting has caused EIA to revise its OPEC crude oil production forecast.
In view of the current fundamentals and the consensus on market perspectives, the 178th (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC), held in Vienna, Austria, on 5 March 2020, decided to recommend to the 8th OPEC and non-OPEC Ministerial Meeting to extend the adjustment levels agreed at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year. It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mb/d until 30 June 2020 to be applied pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation.
However, during the meeting held March 6, OPEC+ failed to reach any agreement on extension of the deal or deepening the cuts further, which led to a significant decline in oil prices.
“After the March 6 meeting, OPEC and partner countries did not agree to further production cuts beyond those currently expiring March 31, 2020. In contrast to the February STEO, EIA no longer expects active production management to target balanced global oil markets among OPEC members or partner countries. These countries had been limiting production under the Declaration of Cooperation, initially agreed to in December 2016,” reads the report.
EIA expects OPEC crude oil production will average 29.1 million b/d in the second and third quarters 2020, up from 28.7 million b/d in the first quarter of 2020.
“However, production levels targeted by OPEC amid low oil demand are uncertain, and realized levels will have a significant effect on crude oil prices. Unplanned supply outages in Libya add additional uncertainty to the OPEC forecast,” said EIA.
Crude oil production in Libya has declined by 1.0 million b/d since December 2019, and EIA estimates February production in Libya averaged 150,000 b/d.
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