At the March 4 meeting, OPEC+ will decide whether to resume partial production of 500,000 barrels per day in April. Many oil companies currently believe that the global market may need more oil, and the biggest question is whether OPEC+ can provide enough oil; if OPEC+’s increase in production still cannot meet demand, it may trigger a further surge in oil prices.
As the crude oil market turns to tightening, many institutions are bullish on oil prices. Goldman Sachs predicts that Brent oil will reach US$75 per barrel in the third quarter, while Azerbaijan’s state-owned oil company Socar Trading SA predicts that, Oil prices could hit $80 this summer and $100 within two years.
Global oil demand recovers and inventories decline, and the market expects OPEC+ to announce an increase in production at the March 4 meeting
Many oil companies currently believe that the global market may need more oil, and the biggest question is whether OPEC+ can provide enough oil.
The excess crude oil accumulated during the epidemic is quickly disappearing. Morgan Stanley said global crude oil inventories are falling at the largest rate in 20 years. Oil prices have climbed back to pre-pandemic levels, while U.S. crude production has been hit by the snowstorm. Rumors that the market has entered a super cycle are rampant, with even speculation that oil prices will rise back to a high of $100 per barrel.
Signs of increasing demand for crude oil in the market are becoming increasingly apparent, and traders expect that OPEC+, led by Saudi Arabia and Russia, will agree to increase production at its meeting on March 4. However, it is unclear whether OPEC+ will take strong enough action. Saudi Arabia’s energy minister urged other oil-producing countries to exercise “extreme caution” amid concerns about the ongoing threat to demand caused by the epidemic.
However, if OPEC+ agrees to increase production, but the increase is still insufficient to meet demand, it may trigger a further surge in oil prices, and OPEC+ will be forced to deal with its unwelcome consequences.
OPEC+’s current production cuts are slightly more than 7 million barrels per day, accounting for about 7% of world supply. At its meeting on March 4, OPEC+ will decide whether to resume partial production of 500,000 barrels in April. Saudi Arabia recently decided to cut production by 1 million barrels per day, and the country will decide at this meeting whether to restore this part of the supply.
The global oil market shows that it can easily absorb an additional 1.5 million barrels of supply. Oil demand has recovered in several Asian countries, including Japan and India, while U.S. crude and refined product inventories have returned to levels close to a year ago. While demand for jet fuel remains sluggish, purchases of crude oil products for work and home consumption – such as diesel for trucks – are surging.
OPEC’s own data shows that it can continue with its plan to increase production this year while still managing to reduce global oil inventories to the five-year average by August, which is the The desired goals of the organization.
Many institutions choose to be bullish on oil prices
As the crude oil market turns to tightening, it has triggered institutional concerns A wave of bullish expectations.
Goldman Sachs expects Brent crude oil prices to reach $75 a barrel in the third quarter as the new commodities super cycle begins, while trading giant Trafigura Group ( Trafigura Group said it was “very optimistic” about oil price trends in the coming months.
Azerbaijani state oil company Socar Trading SA predicts that oil prices may reach $80 this summer and $100 within two years. Hayal Ahmadzada, the agency’s chief trading officer, said: “Even if OPEC+ resumes production, there are concerns that there will be a shortage of crude oil in 12 months, which will push up oil prices very quickly.”
It is unclear what decision OPEC+ will make. Russian Deputy Prime Minister Alexander Novak has already signaled that Russia wants to push oil prices higher again, noting on February 14 that the market was balanced. Saudi Arabia sounded conservative, urging other oil producers to recall the “scars” of last year’s oil price collapse.
Some market participants believe that Saudi Arabia should vigorously increase production. They believe that keeping oil prices high will only reignite investment enthusiasm among U.S. shale oil drillers and bring a large amount of new supply, offsetting OPEC’s production reduction efforts.
Jan Stuart, global energy economist at Cornerstone Macro LLC, believes that even an increase of 1.5 million barrels of crude oil per day will not be enough to meet demand. The crude oil the market needs There is more volume and it is very urgent. </p
