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LONDON (Reuters) – OPEC and other oil producers, a group known as OPEC +, are considering renewing production cuts in April rather than increasing production, as the recovery in oil demand remains fragile due to the coronavirus crisis, three OPEC + sources told Reuters.
OPEC + ministers hold a full meeting on Thursday.
The market expected OPEC + to ease production cuts by around 500,000 barrels per day (bpd) starting in April.
OPEC leader Saudi Arabia is also expected to end its voluntary production cut of an additional 1 million bpd.
But three OPEC + sources said Wednesday that some key OPEC members had suggested keeping the group’s output unchanged.
A ministerial panel meeting ended on Wednesday without making any policy recommendations, two OPEC + sources told Reuters.
It was not immediately clear whether Saudi Arabia would end its voluntary cuts or expand them, they said.
Oil prices rose around $ 1 a barrel with the news to trade near $ 64 a barrel.
On Tuesday, an OPEC + expert paper, seen by Reuters, called for “cautious optimism,” citing “underlying uncertainties in physical markets and macro sentiment, including risks of COVID-19 mutations that are still rising.” .
He said a recent oil price spike could have been caused more by financial players than improvements in market fundamentals.
OPEC expects global oil demand in 2021 to grow by 5.8 million bpd to about 96 million bpd. That would still be lower than demand in 2019, which was roughly 100 million bpd.
Russia was expected to push for further increases. But in February it failed to increase production despite OPEC + allowing it to do so, as harsh winter weather affected production in mature fields.
JP Morgan, who said he had spoken with Russia’s representative on the OPEC + technical committee, Denis Deryushkin, reported that Russia saw some reasons to increase production as the oil market was short of 500,000 bpd.
“Russia believes that if production remains at current levels, the market would enter an even more severe deficit,” the bank said. “As such, it is necessary to restore production, but the speed and quantity have not yet been decided.
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Supply balances + OPEC (base case) tmsnrt.rs/3uSEJf8
OECD Oil Trade Stocks tmsnrt.rs/3rcmJdv
OECD Oil Trade Stocks tmsnrt.rs/3kGN4yb
OPEC + compliance with oil production cuts tmsnrt.rs/3bbp9DK
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Information from Rania El Gamal in Dubai, Ahmad Ghaddar and Alex Lawler in London, Olesya Astakhova and Vladimir Soldatkin in Moscow; Written by Dmitry Zhdannikov; Edited by Edmund Blair, Jason Neely and Jan Harvey
