OPEC+ Meet on Oil Price & Virus Concerns
OPEC and allies, led by Russia, will hold an online meeting on Thursday. Discussion will revolve around compliance with their agreed output cuts and demand trends amid falling oil prices. This includes a faltering economic recovery outlook due to the impact of COVID-19 on energy commodities.
The key OPEC+ panel will review an internal document that indicates a rise in coronavirus cases may curb oil demand. This is despite signs of economic recovery in some countries, and initial indications of a decline in oil stocks. This is according to a copy of the report seen on Thursday.
Organization of the Petroleum Exporting Countries and its allies is a group known as OPEC+. The panel of major producers including Saudi Arabia and Russia from the OPEC+ is unlikely to recommend any changes. That is to their current output reduction target of 7.7M bpd, or around 8% of global demand.
However, they will press laggards such as Iraq, Nigeria and the United Arab Emirates to cut more barrels. That is to compensate for overproduction and possibly extend the period for the compensation, OPEC+ sources said.
JTC and JMMC Panel Meetings
Commodity news reports a technical OPEC+ panel known as the JTC met on Wednesday. This was to review the compliance of the oil exporting group. According to OPEC sources and the document seen, it was 101% of the agreed target in August.
The panel said, there are signs of economic recovery in some parts of the world. And that they’re visible through the relative improvement in mobility. Moreover, some initial indications of declines in oil stock overhang.
Nevertheless, signs of an increase in COVID-19 infections have appeared in some countries, the panel said. This leads to some worries regarding its impact on economic recovery and oil demand.
The technical panel also said it was concerned about the rise in the cumulative overproduction. It has reached 2.38 million bpd from May until August, according to the report.
Thursday’s monthly meeting is known as the Joint Ministerial Monitoring Committee (JMMC). It is expected to start at 1200 GMT, OPEC+ sources said.
Since January 2017, OPEC+ producers have been reducing production. This is to help support prices and reduce global oil stockpiles.
They increased their cuts to a record 9.7 million bpd from May to July. That was after demand plunged in the wake of the coronavirus crisis.
The group has called on Iraq and others to pump below their quota in September. This was in order to compensate for overproduction between May and July.
