Oil slipped Tuesday as OPEC and its allies prepared for a meeting on Wednesday amid calls from the United States to pump more crude, although Brent was still trading well above $ 70 a barrel
The Opec + Joint Technical Committee (JTC) expects the oil market to remain in deficit of 0.9 million barrels per day (bpd) this year, but reached a surplus of 2.5 million bpd in 2022 as the group ramps up production, a presentation seen by Reuters showed. .
The JTC, in a baseline scenario, expects global oil demand to increase by 5.95 million bpd this year, in line with its previous forecast, and by 3.28 million bpd next year.
The Organization of the Petroleum Exporting Countries (OPEC) and its Russian-led allies, collectively known as Opec +, meet at 3:00 p.m. GMT on Wednesday to set their policy.
Sources told Reuters that Wednesday’s meeting would likely leave the plan unchanged despite pressure from the United States to pump more oil.
The JTC, which advises the meeting on market fundamentals, expects trade oil stocks in OECD countries to remain below their 2015-2019 average until January next year, but exceed that average for the remainder of 2022, the JTC presentation showed.
The presentation also described an alternative scenario, which assumes lower demand growth and higher non-OPEC supply growth than the base scenario.
In the alternative scenario, the oil market is expected to show a surplus of 400,000 b / d in 2021 and 4.5 million b / d in 2022.
Oil slips ahead of OPEC + meeting
Meanwhile, oil fell on Tuesday as Opec and its allies prepared for a meeting on Wednesday amid calls from the United States to pump more crude, although Brent was still trading well above $ 70 per barrel.
Prices were also under pressure amid fears that power outages and flooding in Louisiana after Hurricane Ida would reduce demand for crude from refineries.
Crude was also weighed down by manufacturing data from China, where factory activity in August grew at a slower pace than the month before.
Brent crude futures for October, which expire Tuesday, fell 50 cents, or 0.7%, to $ 72.91 a barrel at 1:30 p.m. GMT.
US West Texas Intermediate (WTI) crude futures fell 58 cents, or 0.8%, to $ 68.63.
Both benchmarks were on track for their first monthly loss since March, but still weren’t far from their July highs, when Brent hit its highest level since 2018 and U.S. crude since 2014.
In August, the administration of US President Joe Biden urged the Organization of the Petroleum Exporting Countries (OPEC) to increase oil production to cope with rising gasoline prices.
Prior to the US call, Opec and its allies, known together as Opec +, had agreed to add 400,000 barrels per day (bpd) to their supply each month until the end of December.
Sources told Reuters that Wednesday’s meeting would likely leave the plan unchanged despite pressure from the United States to pump more.
“It looks like we’re sticking to the plan from the last meeting,” an Opec + source told Reuters.
Oanda analyst Craig Erlam also does not expect any change in OPEC policy.
“It would be a surprise if they did anything at this time, despite pressure from the White House, given current price levels, demand and (the) uncertain outlook,” he said.
Opec’s own data showed that the market would be in deficit until the end of 2021, then turn into surplus in 2022.
Hurricane Ida, which made landfall in the United States on Sunday as a Category 4 hurricane, destroyed at least 94% of oil and gas production off the Gulf of Mexico and caused “catastrophic” damage to the Gulf of Mexico. Louisiana power grid.
On the supply side, about 1.72 million barrels per day of oil production and 2.01 million cubic feet per day of natural gas production have remained offline on the U.S. side of the Gulf of Mexico after evacuations on 288 platforms. – Reuters