OPEC retains oil cuts over demand concerns – Update – Meeting delayed hours as Saudi and Russia Ministers are in talks.

OPEC - EnergyNewsBeat.com

Update (9:58 AM MST): Saudi to voluntarily cut oil production in Feb.

Update (8:13 AM MST) – Meeting begins, latest reports are Russia will agree to cut extension provided and increase in March

UpDate: The meeting has been delayed 2 hours to 4:00 PM Vienna time –

Members of the Organization of the Petroleum Exporting Countries (OPEC) and allied producers under OPEC+, yesterday, agreed to cap crude production at current levels in February. The decision was taken at the Joint Ministerial Monitoring Committee (JMMC) meeting.  In December, the partners agreed to raise collective output quotas by 482,000 b/d for January from the 7.68 million b/d that was based largely on October 2018 baselines. Having agreed to raise quotas by 500,000 b/d for January – a compromise between members, despite uncertainty about pandemic recovery, the cartel decided to maintain the conservative quotas next month over demand concerns.

The market, however, reacted to the news as Brent Crude dropped from the $52.43 it recorded earlier in the day to $51.12 as at 5:57 pm WAT while Nigeria’s Bonny light slipped by 0.45 per cent to $50.59 per barrel. The 13 members of the OPEC cartel, led by Saudi Arabia, and their six allies led by Russia, had agreed to meet at the beginning of each month to decide on any adjustments to production volumes for the following month.

Preparatory to the 13th OPEC-non OPEC Ministerial Meeting, Mohammad Sanusi Barkindo, OPEC Secretary-General had, during the 47th Meeting of the Joint Technical Committee Videoconferencing on Sunday, stated that inventory levels remain stubbornly high as the current levels are more than 205 million barrels higher than the same time one year ago and about 163 million barrels above the latest five-year average.

According to him, the cartels can only speculate on how the social and working habits developed out of necessity last year will ultimately affect important areas such as mobility over the longer term. Furthermore, he added that the new strain of the virus is a harsh reminder of how delicate the situation remains after a year of human loss, economic shock, and historic oil market destruction.

Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman, yesterday, said that there is “no room for complacency” for the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) when it comes to possible relaxation of oil output reduction.

The economic uncertainty caused by the coronavirus pandemic is still high, he warned during his remarks at the 13th OPEC-non OPEC Ministerial Meeting, adding that oil demand is “well short” of levels it reached at the same time last year. The new coronavirus strain is a “worrying development,” as well as the “new wave of lockdowns” that would “impact the rate of recovery” of the global economy.

The Guardian