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OPEC+ now expects the oil surplus on the market this year to be higher than its previous estimate by 100,000 barrels per day (bpd), according to a report by the producer group’s Joint Technical Committee (JTC) seen by Reuters on Wednesday.
The alliance of oil producers now sees an oil market surplus of 900,000 bpd for 2022, up by 100,000 bpd compared to the previous projection.
In the base-case scenario, the JTC report estimates that the market surplus will be 3.1 million bpd in September, before dropping to 600,000 bpd in October. For November, the surplus is expected to rise again, to 1.4 million bpd, according to the report seen by Reuters.
JTC reviews the situation in the oil market and advises the OPEC+ group on fundamentals, but it does not recommend a course of action.
However, the raised forecast of an oil market surplus makes the case for OPEC+ production cuts stronger.
Last week, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said that OPEC+ was ready to cut production at any time in any form if it believes it would bring stability to the “schizophrenic” oil market.
After the Saudi signal, OPEC’s rotating president for this year, Congo’s Hydrocarbons Minister Bruno Jean-Richard Itoua, also expressed support for potential cuts. The United Arab Emirates (UAE) has similar views to Saudi Arabia on the crude oil markets, a source familiar with the UAE’s thinking told Reuters last week.
Some other OPEC+ producers, including Iraq, Venezuela, and Kazakhstan, have also signaled support for new production restrictions.
OPEC+ meets on September 5 at a regular meeting, but it’s not a given yet that it would discuss new production cuts.
Two weeks ago, OPEC Secretary General Haitham al-Ghais told Reuters that global oil demand was still robust and would be such through the end of this year. Al-Ghais said that the recent sell-off in oil didn’t reflect fundamentals and was driven by fear.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.