The Ministers of OPEC+ predicts stable oil prices and a possible surplus in 2021

After a sharp drop at the beginning of the pandemic in the price of oil for a long time remain stable. Forecasts of lower demand for oil through the second wave of the pandemic forced the OPEC countries actively engage in the regulation of production.

on Tuesday, the Ministerial monitoring Committee of OPEC+ recommended that the countries had not complied with the obligation to reduce production, to intensify its efforts. Cancel scheduled for January 2021 . the increase of oil production by 2 million barrels/day has not been discussed, however, in the event of a fall in oil demand due to pandemic Covid, with increased sentences, in particular from Libya, at a meeting in December it can move in April 2021, Now the market is concerned whether the American government to negotiate new incentives.

the November futures for WTI on the new York NYMEX yesterday rose 1.5 percent to 41.4 $/barrel, while December futures for Brent crude on London's ICE Futures remained at the level of 42,9 $/barrel.

the meeting discussed the possible surplus of oil on the market in 2021, although in September such a scenario was not considered. The baseline scenario assumes a deficit of oil in 2021г. on average 1.9 million barrels/day, while in September it was estimated at 2.7 million barrels/day. In the worst case a surplus of oil in 2021г .can reach 200 thousand barrels/day. Accelerating the spread coronavirus may soon risks for the recovery of the economies and demand for oil.

OPEC+ decided in the period from may to July to reduce world oil production to 9.7 million barrels/day against a backdrop of falling demand and oil prices. From August production must be reduced by 7.7 million barrels/day, and from January 2021г. it was planned to limit the decrease of 5.7 million barrels/day.

However, after a meeting in September, Libya has significantly increased production, and the distribution of Covid individual countries have added to the quarantine restrictions. In the baseline scenario, Libya will produce in 2021г. 600 thousand barrels/day in the worst variant it will increase production to 1.1 million barrels/day. The worst scenario envisages a duration of the second wave of the pandemic in Europe, USA and India to Q1 2021, that will slow the economic recovery and reduce demand for oil.

the Next meeting of OPEC Ministers+ scheduled for 30 November – 1 December.