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OPEC+ sees tighter oil market until May 2022

OPEC+ sees tighter oil market until May 2022
OPEC+ sees tighter oil market until May 2022   -   Copyright  Thomson Reuters 2021
By Reuters

By Rania El Gamal, Ahmad Ghaddar and Alex Lawler

DUBAI/LONDON -OPEC+ expects the oil market to be in deficit at least until the end of 2021 and stocks to stay relatively low until May 2022, OPEC+ sources said on Tuesday, a day ahead of a policy meeting amid U.S. pressure to raise production.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, meet on Wednesday at 1500 GMT to set policy.

Sources told Reuters the meeting is likely to roll over existing policies despite pressure from the United States to pump more oil.

Still, the forecast for a tighter market strengthens the case for a speedier output increases by OPEC+ as benchmark Brent oil prices trade close to $73 per barrel – not far off their multi-year highs.

The comments from sources came as experts from the OPEC+ joint technical committee (JTC) presented an updated report on the state of the oil markets in 2021-2022.

According to the sources, the report, which has not been made public, forecasts a 0.9 million barrel per day (bpd) deficit this year as global demand recovers from the coronavirus pandemic while OPEC+ gradually brings back production.

Initially, the report had seen a surplus of 2.5 million bpd building in 2022 but it was later revised to a smaller surplus of 1.6 million bpd, according to the sources.

As a result, commercial oil inventories in OECD countries will remain below their 2015-2019 average until May 2022 as apposed to the initial forecast for January 2022, the JTC presentation showed, according to the sources.

The JTC had expected global oil demand to grow by 5.95 million bpd this year and by 3.28 million bpd next year. It was not clear if those figures have been revised up in the latest report.