With oil prices rebounding, OPEC+ is expected to continue to increase production | Algeria News

Earlier this month, the crude oil market was shaken due to the re-epidemic pandemic threatening demand in China and the United States, but prices have since rebounded.

As oil prices rebound from the decline in August, OPEC and its allies are expected to continue to resume oil production as planned when they meet next week.

Bloomberg’s survey of traders and analysts shows that the coalition led by Saudi Arabia and Russia is gradually resuming the large amount of crude oil production that was stopped during the pandemic, and may approve the next month’s installment when it meets on September 1. . Several OPEC+ representatives privately predicted the same result.

As the re-epidemic pandemic threatens demand in China and the United States, the crude oil market faltered earlier this month but prices have rebounded after fuel usage proved resilient to the latest wave of coronavirus, giving OPEC and its partners more A lot of breathing space.

Ed Morse, Head of Commodity Research at Citigroup, said: “The uncertainty of the world economy and China’s growth recovery have largely disappeared. There is ample evidence that the bottom of oil prices is temporary and excessive. If the recovery continues , OPEC+ may stick to the plan.”

The cartel has restarted approximately 45% of the unprecedented output that closed last spring. According to a plan led by Prince Abdulaziz bin Salman, Saudi Energy Minister, OPEC+ will return the remaining oil in increments of 400,000 barrels per day before the end of 2022.

17 of 22 traders, analysts and refiners surveyed by Bloomberg expect that the schedule for Wednesday’s meeting will not change, which means that the October interest rate hike will proceed as planned.

Under pressure

The OPEC+ alliance’s careful management of the oil market keeps oil prices high enough to support the recovery of the global oil industry, and to a large extent avoided the kind of surge that might threaten the recovery of the world economy.

However, the group still faces pressure from all sides.

Earlier this month, its plan to increase supply was questioned. As China re-imposed the blockade, international crude oil prices fell by approximately US$11/barrel in the first three weeks of August, a drop of approximately 15%. The International Energy Agency, a well-known forecasting agency, lowered its demand outlook for the rest of the year and warned of a new surplus in 2022.

To the surprise of many OPEC observers, the organization also found itself being pulled in another direction because the White House publicly urged it to resume production more quickly to cool the soaring gasoline prices. However, several OPEC+ countries stated that they did not hear a direct request, and analysts concluded that President Joe Biden’s message was aimed at domestic audiences.

“I think they will send Biden’s call for an increase in production directly to voice mail,” said Helima Croft, chief commodity strategist at Royal Bank of Canada Capital Markets.

Strong demand

OPEC + observers who have made mistakes several times this year freeze supplies when expected increases, and vice versa. But so far, this meeting is progressing smoothly than the previous meeting, allowing the OPEC+ alliance of 23 countries to maintain its progress.

As negotiations to lift US sanctions are deadlocked, the organization will not face the imminent prospect of Iran re-supply. Oil demand seems strong enough to absorb the additional oil.

As this major crude oil importer quells the resurgence of Covid-19 cases, traffic on China’s usually busy city streets appears to be recovering. In the United States, gasoline consumption remains unchanged as drivers try to make the most of the summer vacation. As people flocked to tourist attractions after months of blockade, flying even made a comeback in India.

International benchmark Brent crude oil futures have rebounded to 72 US dollars per barrel, providing some respite from the hard-hit financial situation of oil producers.

Croft said: “As long as the Chinese government seems to be under control of the latest Covid epidemic, I think they will stick to the current plan and reiterate their ability and willingness to adjust as needed.”