The OPEC+ group of oil producers meets on Thursday to decide on a further easing of output cuts next month and could also consider extending its overall supply pact beyond April 2022, sources within the group told Reuters.
The group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia on Wednesday warned of “significant uncertainties” and the risk of an oil glut next year.
The supply pact forged in response to the COVID-19 pandemic’s destruction of global oil demand imposed record cuts of about 10 million barrels per day (bpd) from May 2020, phasing out by the end of next April. Supply cuts still in place stand at about 5.8 million bpd.
A report from the OPEC+ Joint Technical Committee (JTC) on Wednesday said that it expects an overhang of crude by the end of 2022, based on several scenarios for supply and demand.
The report said the market would be in deficit in the short term but a glut will be on the horizon after the OPEC+ cuts end.
Oil prices were trading near $75 a barrel on Thursday, more than 40 percent higher than at the start of year.
The JTC still expects global oil demand to grow by 6 million bpd in 2021 but it said that “significant uncertainties” remain, including divergence in the global economic recovery, climbing sovereign debt, uneven vaccine rollouts and rising cases of the Delta variant of the coronavirus.
OPEC watchers said the group could leave production unchanged when ministers meet on Thursday or decide to boost output, possibly by more than 1 million bpd or a more modest 0.5 million bpd.