By Vladimir Soldatkin MOSCOW, Oct 16 (Reuters) - OPEC and i
By Vladimir Soldatkin
MOSCOW, Oct 16 (Reuters) – OPEC and its allies worry a protracted second wave of the COVID-19 pandemic and a soar in Libyan output may push the oil market into surplus subsequent yr, in keeping with a confidential doc seen by Reuters, a gloomier outlook than only a month in the past.
A panel of officers from OPEC+ producers, known as the Joint Technical Committee, thought-about this worst-case state of affairs throughout a digital month-to-month assembly on Thursday. In September, the panel had not seen a surplus underneath any situations it thought-about.
Such a surplus may threaten plans by OPEC, Russia and allies, often called OPEC+, to taper report output cuts made this yr by including 2 million bpd of oil to the market in 2021.
The Group of the Petroleum Exporting International locations has not indicated any plan thus far to scrap that provide increase.
“The sooner indicators of financial restoration in some components of the world are overshadowed by fragile circumstances and rising scepticism concerning the tempo of the restoration,” in keeping with the doc used within the panel’s month-to-month assembly in October.
“Specifically, a resurgence of COVID-19 instances the world over and prospects for partial lockdowns within the coming winter months may compound the dangers to financial and oil demand restoration,” it mentioned.
The doc offered situations that included a base case that also confirmed a deficit in 2021 of 1.9 million barrels per day (bpd) on common, albeit lower than the deficit of two.7 million bpd forecast within the earlier month’s base case.
However underneath its worst-case state of affairs, the doc mentioned the market may flip right into a surplus of 200,000 bpd in 2021.
This yr, OPEC+ agreed to make report output cuts to assist plunging costs as oil demand collapsed. It reduce 9.7 million bpd from Could, tapering that to 7.7 million bpd from August. From January, cuts are as a consequence of ease to five.7 million bpd.
Nonetheless, because the JTC met in September, Libyan output has climbed and a world rise in coronavirus instances has led to renewed restrictions on motion in some international locations, weakening demand for crude.
OPEC-member Libya is exempt from any manufacturing cuts.
Underneath the doc’s worst-case state of affairs, Libyan manufacturing would rise in 2021 to as a lot as 1.1 million bpd, a supply accustomed to the main points of the assembly mentioned. Underneath its base case, Libyan output could be 600,000 bpd in 2021.
Underneath the worst-case state of affairs, OECD industrial oil inventories – a benchmark OPEC+ makes use of to gauge the market – would stay excessive in 2021 in comparison with the five-year common relatively than beginning to fall beneath that mark.
This state of affairs additionally sees a stronger and extra extended second wave of COVID-19 within the fourth quarter of 2020 and first quarter of 2021 in Europe, the US and India resulting in a decrease financial restoration, weakening oil demand.
Underneath the doc’s base case, OECD oil shares are anticipated to face barely above the five-year common within the first quarter of 2021, earlier than falling beneath that degree for the remainder of the yr.
A ministerial OPEC+ panel, often called the Joint Ministerial Monitoring Committee (JMMC), will take into account the outlook when it meets on Monday. The JMMC could make a coverage suggestion.
Oil ministers from OPEC+ international locations are scheduled to satisfy once more on Nov. 30-Dec. 1.
(Reporting by Vladimir Soldatkin; Modifying by Alex Lawler and Edmund Blair)
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