Most of the members of OPEC+ are reportedly favoring delaying another 500,000 barrels per day (bpd) increase in collective production from February due to the surging COVID-19 cases and the new lockdowns imposed to fight them, three sources at OPEC+ told Reuters on Monday.
As of January 2021, the group is already easing the collective cut by 500,000 bpd, and producers’ cuts are set to be 7.2 million bpd this month, compared to 7.7 million bpd in December.
The ministers of the OPEC+ group are meeting at the time of writing early on Monday to discuss the production policy in February. Russia, the leader of the non-OPEC group in the alliance, is reportedly favoring another 500,000 bpd increase in the alliance’s production from next month. So is the OPEC heavyweight the United Arab Emirates (UAE), according to reports.
However, according to OPEC+ sources who spoke to Reuters, most of the others are in favor of postponing another increase in production in light of the new lockdowns in Europe that continue to threaten oil demand recovery.
As of 8 a.m. ET on Monday, the Joint Ministerial Monitoring Committee (JMMC) had just begun its online meeting to discuss production levels for February.
Amena Bakr, Deputy Bureau Chief & Chief OPEC Correspondent at Energy Intelligence, reports that according to delegates, Russia and the UAE want OPEC+ to boost production by another 500,000 bpd in February, while OPEC’s top producer Saudi Arabia, as well as Algeria and Kuwait, say the market is fragile and rollover of the current level of production would be the best decision at this time.
At the Joint Technical Committee (JTC) meeting on Sunday, OPEC Secretary General Mohammad Barkindo warned that the market still has many downside risks to factor in.
“Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” Barkindo said.
Oil prices erased earlier gains and were trading down at 8 a.m. on Monday, just after the JMMC meeting started.
By Tsvetana Paraskova for Oilprice.com
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