OPEC+ expects the surplus on the oil market in the first quarter of 2022 to be 1.4 million barrels per day (bpd), or some 25 percent lower than it forecast in early December, Bloomberg reported on Monday, citing internal OPEC+ research a day before the group is set to announce its production policy for February.
Lower expected oil supply from non-OPEC+ producing nations was the key reason for a downgrade in the surplus estimate, according to Bloomberg.
Expectations of strong demand this year have also resulted in a lower surplus forecast for the full 2022, according to the internal document the Joint Technical Committee (JTC) is reviewing today, ahead of the OPEC+ ministerial meeting on January 4.
OPEC+ now sees overall 2022 oil market surplus at 1.4 million bpd, down from an early December estimate of a 1.7-million-bpd oversupply.
The group continues to see the Omicron impact on demand as “mild and short-lived,” just as OPEC said in its Monthly Oil Market Report (MOMR) in mid-December.
At the start of December, the OPEC+ alliance expected a larger oil market surplus to the tune of 2 million bpd and more during the first quarter of 2022. Those expectations were part of analyst forecasts that OPEC+ could pause its monthly production additions in view of the Omicron uncertainty and large surpluses expected for 2022.
Yet, OPEC+ decided on December 2 to stick to its initial plans to add 400,000 barrels per day to its collective oil production each month.
Days before this month’s meeting on Tuesday, January 4, the general market sentiment and expectations are that the alliance would likely proceed with its oil production policy of the past few months by deciding to add another 400,000 barrels per day to its collective output quota
By Tsvetana Paraskova for Oilprice.com
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