Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

OPEC+ leaning towards oil cut extension, despite rally: sources

11/25/2020 | 10:09am EST
FILE PHOTO: The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters in Vienna

MOSCOW/LONDON (Reuters) - OPEC and allies including Russia are leaning towards delaying next year's planned increase in oil output to support the market during the second wave of COVID-19 and rising Libyan output, despite a rise in prices, three sources close to OPEC+ said.

OPEC+ was due to raise output by 2 million barrels per day (bpd) in January - about 2% of global consumption - as it moves to ease this year's record supply cuts. With demand weakening, OPEC+ has been considering delaying the increase.

Russia is likely to agree on a rollover of current output for the first quarter if needed, a source familiar with the issue said, and would prefer to decide later on extending for the second quarter.

"It looks like the extension is needed," the source said, citing "possible price drops and demand uncertainties" amid the second wave of the virus.

Oil has rallied in the past week, rising to its highest since March near $49 a barrel on hopes that coronavirus vaccines will lead to higher demand. [O/R]

This hasn't changed OPEC+ thinking around the extension, delegates said.

"This increase in prices is about sentiment, but we need to extend to have solid market fundamentals to support the prices," said one. "So far, the best choice is the three-month extension."

Still, enthusiasm for extended cuts is not universal, delegates and analysts say.

A potential complication is the United Arab Emirates' wish for a higher OPEC+ quota, Goldman Sachs said this week.

Nigeria also wants a higher quota, and Iraq has talked about being exempt from 2021 reductions.

But Goldman said it did not expect such a push from the UAE to derail the extension, and Iraq has said it will support any unanimous OPEC+ decision.

There are several technical meetings this week to prepare the ground for ministerial gatherings on Monday and Tuesday. All meetings are virtual due to the pandemic.

Christyan Malek, managing director and head of oil & gas research at J.P. Morgan, said he expected OPEC+ to delay the increase by up to six months despite the price rally, with Saudi Arabia possibly offering deeper voluntary cuts until March.

"Inventories are not coming down as quickly as expected. And lockdowns are moving east to west, with more lockdowns expected in the U.S.," he said.

Malek said the departure of Donald Trump as U.S. President, who was seen by some in OPEC as a friend after he helped bring Russian President Vladimir Putin into the OPEC+ output cut in April, would actually boost the producer alliance.

"Without Trump, OPEC+ is getting stronger rather than weaker," he said. "Putin is using OPEC+ to get closer to Saudi Arabia, as the departure of Trump creates a bit of a vacuum in U.S.-Saudi relations."

(Reporting by Olesya Astakhova, Alex Lawler, Ahmad Ghaddar, Rania El Gamal and Dmitry Zhdannikov; Editing by Jan Harvey)

By Olesya Astakhova, Alex Lawler and Ahmad Ghaddar

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
EURO / DIRHAM (EUR/AED) -0.30% 4.4441 Delayed Quote.-1.13%
US DOLLAR / DIRHAM (USD/AED) 0.00% 3.6728 Delayed Quote.0.00%
Latest news "Economy & Forex"
04:03pTSX rises 0.38% to 18,026.36
04:00pWall Street sets record as Netflix jumps, Biden inaugurated
04:00pBOJ to hold fire, warn of pandemic-related risks to fragile recovery
03:48pWORLD BANK : Helps Kosovo Purchase Medical Equipment to Strengthen Its COVID-19 Response
03:38pBANK OF JAMAICA : Press Release - which inflation rate
03:35pDollar slides vs most currencies on optimism about Biden administration
03:30pOil rises on U.S. stimulus hopes, tighter market under Biden
03:27pDollar slides vs most currencies on optimism about Biden administration
03:26pU.S. and Canada underestimating climate risk from abandoned oil and gas wells -study
03:24pCANADA FX DEBT-Loonie notches 3-year high as Bank of Canada skips 'micro rate cut'
Latest news "Economy & Forex"