London — OPEC+ maintained its oil output policy at a meeting on Wednesday, a sign producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the pandemic lingers.
A Joint Ministerial Monitoring Committee of OPEC+ met virtually on Wednesday, pronouncing itself “optimistic for (a) year of recovery in 2021,” a statement issued after the meeting said.
Oil has rallied from historic lows hit last year as the pandemic hit demand, thanks to record output cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ that the group is beginning to unwind.
“While inventories are drawing fast, the market is pricing in a smooth rollout of vaccines and that may be premature,” said Amrita Sen, co-founder of Energy Aspects.
The OPEC+ panel made no mention of changing policy, which calls for most members to hold supply steady in February and top exporter Saudi Arabia to cut output voluntarily by 1 million barrels per day this month and next.
“While economic prospects and oil demand would remain uncertain in the coming months, the gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand,” the statement issued after the meeting said.
A document seen by Reuters on Tuesday showed OPEC expects the output cuts will keep the market in deficit throughout 2021, even though the group has revised down its forecast of the pace of this year’s oil demand recovery.
Oil prices extended gains on Wednesday after the meeting ended and benchmark Brent crude traded as high as $58.74 a barrel, the highest since late February 2020.[O/R]
The OPEC+ panel meets next on March 3 and this is expected to be followed by a full OPEC+ gathering to decide policy.
*Rania El Gamal, Alex Lawler, Ahmad Ghaddar, Olesya Astakhova & VZhdannikov, editing: Dimitry Zhdannikov, Elaine Hardcastle & Jane Merriman – Reuters