OPEC+ says that the overall conditions in the oil market have significantly improved in recent months. The group was optimistic as this week’s meetings began, with a decision on whether they will ease the production cuts further expected on July 1.
“The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth,” OPEC Secretary-General Mohammad Barkindo said at the meeting of the Joint Technical Committee (JTC) on Tuesday.
The JTC meeting, which precedes the Joint Ministerial Monitoring Committee (JMMC) scheduled for Wednesday and the OPEC+ ministerial meeting on Thursday, discussed the latest oil market developments and the future prospects of economic and oil demand growth.
“A combination of improving market indicators and the ongoing commitment of DoC countries to restore stability to the global oil market suggests that we are on the right path to recovery from the #COVID19 pandemic, despite lingering uncertainties,” Barkindo said at the JTC meeting today.
Commercial oil stocks in OECD countries have already fallen below the 2015-2019 average, as per preliminary May 2021 data, and were 275 million barrels lower than at this time last year, Barkindo told the meeting, as quoted by Amena Bakr, Deputy Bureau Chief and Chief Opec Correspondent at Energy Intelligence.
The OPEC+ alliance is “pleased to see the steady reduction in inventories that were alarmingly nearly at tank tops last year at the height of the pandemic,” Barkindo also noted.
Analysts largely expect the group to decide on Thursday to further ease the cuts as of August 1.
“Given the strength in the market, and concerns over tightness it is largely expected that OPEC+ will increase supply, and our expectation is that the group will agree on a 500Mbbls/d increase for August. Anything less than this amount would likely be enough to see bulls push the market higher in the near term,” ING strategists Warren Patterson and Wenyu Yao said on Monday.
By Tsvetana Paraskova for Oilprice.com
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