OPEC Plus agreement on a gradual increase in oil production in 2021
The decline in OPEC Plus members’ oil production in the first month of 2021 will be 7.2 million barrels. It indicates an increase of 500,000 barrels of oil production in these countries. According to the initial agreement in the spring this year, the reduction in production from the beginning of 2021 should have reached 5.7 million barrels per day. Still, due to the OPEC and non-OPEC markets’ fragility, they decided to increase the current level of supply.
Finally, after a long dispute, OPEC Plus members reached a consensus to maintain the level of production cut at 7.2 million barrels.
Accordingly, OPEC Plus member ministers decide how much to cut production for the following month each month.
This will reduce the supply in the oil market by 1.5 million barrels compared to expectations. Besides, the price of black gold can increase with the success of coronavirus vaccine. It can help maintain the balance of supply and demand in the oil market.
The meeting also welcomed the new Russian Minister of Energy and stressed OPEC Plus countries’ continued commitment to market stability and mutual interests.
The meeting emphasized that it is vital that producers stay committed to their goals to stabilize the market.
According to the oil market foundations in 2021, the current level of commitment, which was decided in April 2020, will be maintained and production will be gradually increased.
Production will increase by 500,000 barrels in January. Besides, OPEC Plus ministerial meetings will be held in the coming months to determine output.
Analysts expect oil prices to increase since there is a lot of support in the market
Analysts think that the $43 level should continue to offer support for WTI crude oil. In the past, it acted as a resistance barrier that is difficult to breakthrough.
The Brent markets have been swaying during the trading session on Thursday. Analysts think that there is a lot of support underneath and that suggests that buyers will keep coming in whenever they see a correction from now on. According to them, the market should go to the level at $50, and it is even possible that it reaches $55. At the moment, the price could continue as it has been up to now. Besides, a fall in the US dollar could drive a rebound in prices in the short term.
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