On Sunday, August 16, 2020, the pumping unit, also known as the “nodding donkey”, was reflected in a puddle when it was operating in an oil field near Almetevsk, Russia.
Andrei Rudakov | Bloomberg via Getty Images
London-A group of some of the world’s most powerful oil producers will meet on Thursday to agree on output policies for the next phase.
OPEC and non-OPEC partners (sometimes called OPEC+) plan to hold a virtual meeting at 1
The OPEC+ alliance is currently cutting more than 7 million barrels of oil a day in an attempt to boost prices and reduce oversupply. Saudi Arabia, OPEC’s main force, voluntarily increases these cuts by 1 million barrels a day.
The meeting was shortly after the reopening of the Suez Canal, and as the coronavirus continued to spread around the world, French President Emmanuel Macron ordered the country to enter a third nationwide lockdown to relieve some of the pressure on the hospital .
The ongoing coronavirus crisis continues to cast a shadow over the demand outlook, which analysts expect to reiterate Saudi Arabia’s cautious attitude towards the global economic recovery.
Analysts from the Eurasia Group said that the most likely outcome of the OPEC+ meeting is that the group will keep production unchanged from April, and Saudi Arabia will continue to withhold the 1 million barrels per day increase-although this may be slightly reduced by 100,000 barrels, “Zhi expressed willingness to make adjustments.”
They pointed out that the last month of the global oil market “exhibited extreme volatility” and the sell-off caused Brent crude oil futures to fall from US$70 per barrel to US$62 per barrel, and then stabilized at US$64 per barrel in recent days. about.
Eurasia Group (Eurasia Group) analysts said in a research report released on Wednesday: “The Suez Canal incident may have helped many oil producers because it prevented further declines in prices.”
They added: “Again, it is difficult to say whether a sustainable recovery is sufficient to justify the strong OPEC+ cut cycle to be followed every month. Saudi Arabia’s cautiousness in the global economic recovery is well-founded in many respects.”
The international benchmark Brent crude oil futures reported at US$62.90 per barrel on Thursday, an increase of about 0.3%, while the US West Texas Intermediate crude oil futures reported at US$59.42 per barrel, an increase of more than 0.4%.
Soon after midday London time, both contracts gave up their gains during that period and briefly turned negative after rising by more than 2% earlier in the day.
Prior to the meeting, OPEC Secretary-General Mohamed Barkindo emphasized that due to the continuing uncertainty and vulnerability caused by the coronavirus pandemic, “very caution must be taken”.
Similarly, Saudi Arabia has previously encouraged its allies to maintain an “extremely cautious” attitude towards production policies, warning the organization not to be complacent when seeking to ensure a full recovery in the oil market.
At the same time, non-OPEC leader Russia has been seeking the group to boost supply.
Two OPEC+ sources who asked not to be named told Reuters that the increase in oil production will not exceed 500,000 barrels at the meeting on Thursday. CNBC cannot independently verify these sources.
“I think if you look into the second half of the year, as we enter the third and fourth quarters, demand may increase by 4 to 5 million barrels. I think this is indeed when the tension in the oil market really reappears.” Neil Beveridge, Bernstein’s senior oil and gas analyst, told CNBC’s “Capital Connect” program on Thursday.
“It is still too early to increase production, but as we enter the second half of the year, demand has been suppressed a lot. If OPEC wants to control prices, it needs to put oil on the market.”
US Secretary of Energy Jennifer Granholm (Jennifer Granholm) said on Twitter on Thursday that she had a dialogue with Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, reiterating “The importance of international cooperation to ensure affordable and reliable energy for consumers.”
This is believed to be the first time a US official has called Riyadh since OPEC President Joe Biden took office.
OPEC+ initially agreed to cut oil production to 7.7 million barrels last year, and finally to 7.2 million barrels from January, last year to cut oil production to a record 9.7 million barrels per day.
From early February to March, Saudi Arabia has cut 1 million passengers, but unless further measures are announced on April 1, these cuts will expire.