U.S. West Texas Intermediate crude oil futures are trading flat but remained on track to record their third consecutive weekly rise. The catalysts behind the gains were speculation that OPEC and its allies will keep production in check, and optimism over successful COVID-19 vaccine trials. Helping to keep a lid on gains was the spread of the virus.
OPEC+ Holds Ministerial Committee Meeting
An OPEC+ ministerial committee held a meeting earlier in the week designed to look at adjusting plans for oil supply cuts next year as the coronavirus pandemic continues to drive down demand.
The group known as OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and others, are now due to wind down cuts that now stand at 7.7 million barrels per day (bpd) to 5.7 million bpd from January.
Winding down production cuts at a time when demand is falling and production from Libya is rising, raises the chances of a supply glut, which has prompted OPEC+ to consider pushing back any increase in supply by three or six months.
Reuters reported that OPEC+’s Joint Technical Committee (JTC) has looked at various scenarios on altering the deal on output cuts and the impact each scenario would have on reducing OECD inventories in line with the five-year average.Scenario A: The base case adopts modified data from the November 2020 OPEC monthly report, in particular on oil demand.Scenario B: This alternative scenario assumes higher contractions…