Most OPEC+ members, including Saudi Arabia, supported maintaining current production in February, but Russia asked for an increase in production. OPEC+ failed to reach an agreement on Monday and talks will continue on Tuesday.
At the meeting, Saudi Energy Minister Abdulaziz Ben Salman stressed the risks to the oil market posed by the new variant virus: "although this may be a disappointment, I urge everyone to be cautious. The new variant virus is worrying and unpredictable." In addition, Algeria, Nigeria, Oman and the United Arab Emirates and other countries are also in favor of maintaining a stable supply in February.
But Russia and Kazakhstan say the rebound in demand justifies higher production. Russian Deputy Prime Minister and Energy Minister Novak reiterated at a closed-door meeting that he hopes OPEC+ will increase production by another 500000 barrels per day next month. However, Novak did not publicly state his position, saying the market was in a "healthier state" and warned of "uncertainty" in the future.
At a meeting last month, OPEC+ decided to increase production by 500000 b / d in January and agreed to hold monthly meetings to assess production in order to fine-tune production levels more accurately.
The haze of the epidemic still hangs over the oil market.
OPEC Secretary General Barjindu warned that the oil market still faces risks, although OPEC expects crude oil demand to increase by 5.9 million barrels per day to 95.9 million barrels per day this year, but there is still a downside risk to the oil market in the first half of 2021. Travel restrictions are still restricted in many countries due to the emergence of new variants, and it is unclear how the economy will be affected, and it may take two years for the tourism and leisure industries to return to pre-crisis levels.
Edward Moya (Edward Moya), senior market analyst at OANDA in New York, said: "Vaccine promotion has not been successful in most parts of the world, and it does not bode well if oil production is increased by another 500000 b / d in February."
At present, the market basically believes that OPEC+ will not increase production in February. Energy Aspects said OPEC+ could decide to maintain January production levels in February. Helima Croft, chief commodity strategist at RBC Capital Markets LLC, agreed: "as the number of novel coronavirus cases continues to increase and the vaccine launch is slower than expected, we think OPEC+ will choose not to increase production further in February."
