This article was published in English on 01.04.2021.
OPEC + will set oil production levels again today and for May. Along with non-member Russia and 10 other countries, the 13-member organizations (all called OPEC +) continue their monthly meetings with their new strategy that allows them to adjust to the market. Here’s what to watch:
Prices rose above $ 70 on March 7 but are now lower. It is trading in the low range of $ 60 and is just under $ 60 since midday on Wednesday. Recent volatility (and particularly high gasoline prices in the US) may give the impression that prices are higher, but Brent is at least 8% lower than the highs he saw in March.
At its technical meeting earlier in the week, OPEC took a notable step to publicly refute its economists. OPEC members instructed professionals at the establishment to lower their second-quarter oil demand forecast. While the news is contradictory, as far as we know, the driving force behind this revision seems to be Saudi Arabia, which is trying to encourage the continuation of current production cuts to support prices. Imagine, Saudi Arabia continues to voluntarily cut 1 million barrels of oil per day. While investors will seek guidance on when Saudi Arabia will reintroduce these barrels to the market, such guidance seems unlikely this week.
At the same time, Russia is likely to want a small increase in production as usual. Russia claims it needs to produce more to meet domestic needs, and Russia can easily produce more with the freezing of its oil fields in the north. OPEC + has approved Russia’s request for an increase in production twice this year. So there is no reason to believe that such a request will be denied this month.
Interesting discussions behind closed doors can revolve around producers’ views on oil prices today. Do they see $ 70 as an achievable and sustainable target, or do they consider Brent’s surge above $ 70 as a singular event?
Reporters and analysts will look for clues on this at OPEC + ‘s press conference – if done after this month’s meeting.
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