Dubai/London/Moscow — OPEC and its allies see oil inventories declining further in 2021 should producers extend supply curbs for three months or more, a confidential document seen by Reuters shows, supporting the case for a tighter policy on crude output next year.
The OPEC+ producer group, for now, is due to raise output by 2 million barrels per day (bpd) in January, or about 2% of global consumption, as part of an earlier agreement to steadily ease record supply cuts that were implemented this year.
But weakening demand has prompted OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and others, to consider delaying the increase.
The report by an OPEC+ panel, known as the Joint Technical Committee (JTC), said the rebound in global oil demand next year would be less than previously thought as the coronavirus second wave continues.
“For 2021, oil demand is expected to grow by 6.2 million barrels per day, year on year, representing a downward revision of 0.3 million barrels per day compared to last month’s assessment,” the report said.
The level of oil inventories in industrialised OECD countries relative to their five-year average is a key benchmark for OPEC+. Stocks have soared in 2020 as demand collapsed due to the pandemic.
According to one scenario in the report, if oil cuts were extended to the end of March 2021, OECD commercial inventories will decline to stand at 73 million barrels above the five-year average in 2021.
If the reduction pact was extended to the end of June, OECD stocks would fall and stand only 21 million barrels above the five-year average next year, according to another scenario.
The JTC met virtually on Monday before another panel, the Joint Ministerial Monitoring Committee (JMMC), meets on Tuesday. The meeting of the JMMC, which can recommend policy steps to OPEC+, is scheduled to start at 1300 GMT.