OPEC+ still has plenty of oil supply waiting to be released back into market – IHS Markit

BAKU, Azerbaijan, Jan.6

By Leman Zeynalova – Trend:

OPEC+ is generally optimistic about the approval and distribution of the COVID-19 vaccine across the world, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.

This is despite the fact that COVID-19 cases continue to rise and many areas are still in full lockdown with only very limited travel, and therefore much reduction in consumption of oil, he said.

“Therefore OPEC+ feels that a gradual, but controlled supply of additional oil is appropriate. Oil price is likely to remain at around $50-55/bbl through 2021. As demand increases so will supply of oil, OPEC+ still has plenty of oil supply waiting to be released back into the market,” added the expert.

OPEC+ agreed to lift oil production by 75,000 barrels per day over January levels.

But Saudi Arabia’s late announcement after the meeting sent oil prices soaring—that Saudi Arabia would voluntarily cut an additional 1 million barrels per day in February and March above its current quota—all while OPEC’s allies get to ramp up production.

The OPEC+ agreed not only for the production levels for February but for March as well. March’s production level will see an additional increase of 120,000 barrels per day over February levels, or 195,000 bpd over January levels.

With March’s production quotas already set, the February meeting, therefore, will set production quotas for April. The previous meeting held in December adjusted the total production cuts to 7.2 million bpd for January, from 7.7 million bpd before.

The US JP Morgan Bank expects OPEC+ to produce 38.459 mb/d in 2021 and 42.295 mb/d in 2022.

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