Global economic and oil demand recovery is still anemic, OPEC Secretary General Mohammad Barkindo said on Monday, but noted that the cartel doesn’t see another plunge in demand like in the second quarter.
“We do not expect a relapse to the massive contraction that we saw in the second quarter,” Barkindo said at the virtual 2020 India Energy Forum by CERAWeek on Monday.
“We remain cautiously optimistic that the recovery will continue. It may take longer, maybe at lower levels, but we are determined to stay the course,” OPEC’s chief said.
The market is increasingly concerned about the pace of demand recovery as the second coronavirus wave is sweeping through the U.S. and Europe. Additional supply out of Libya and the OPEC+ plan to ease the cuts by another 2 million barrels per day (bpd) as of January 2021 have put more pressure on oil prices in recent weeks.
“We are determined to assist the market to restore stability by ensuring that the stock drawdowns continue in order to restore the supply-demand balance,” OPEC’s Barkindo said today, while speculation is growing whether the group would delay the easing of the cuts by several months until global oil demand shows positive trends.
Earlier this month, Barkindo sought to assure the oil market that the OPEC+ group would look to ensure that prices do not plummet again as they did in the spring. Keeping market stability is the top priority of the OPEC+ agreement, but “We have no illusions this recovery will take a long time,” Barkindo said on the Energy Intelligence Forum.
Early on Monday, at 9:30 a.m. EDT, oil prices were down by around 2 percent, with the WTI Crude price trading just below $39 a barrel amid concerns about both demand and supply. On the demand side, the second wave continues to weigh on the prospects of oil demand recovery, while the return of Libyan oil is bearish for oil supply. These developments have increased market talk and speculation that OPEC+ could be forced to postpone the planned easing of the cuts.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com