OPEC+ is preparing to extend the limitation of production

Increasing quotas for oil production by OPEC+ countries from January at the meeting on November 30, it is becoming less likely. Today, OPEC again reduced the demand forecast for 2021 due to the effects of the second wave of coronavirus.

The world oil reserves in 2020 are growing, despite the decrease in the production of cartel countries and the oil -producing powers that joined them, OPEC writes. Over the three quarters of 2020, the demand for oil fell half the supply - by 10.7 million b/s and 5.4 million b/s, respectively, which led to the accumulation of 830 million barrels of “excess” reserves.

The level of OPEC production in the fourth quarter is 26.51 million b/s - by 3 million b/s lower than the August forecast of the organization and 2.1 million b/s less demand. This means that if you “dissolve” quotas from January by 2 million b/s, then the global oil reserves will practically not decrease, Bloomberg notes.

Cartel expects that oil demand in 2020 will decrease by 9.8 million b/s to a year, which is 0.3 million b/s worse than the previous forecast. In 2021, demand will be restored by no more than 6.2 million b/s to the failure of the previous year (+7 million b/s were forecasted in July). On average, next year, the cartel should not get more than 27.4 million b/s. “The consequences of the structural blow of the pandemic on various sectors of the economy, especially by transport, will last most of the 2021 years,” the new forecast says.

What's next

The OPEC+ members have agreed to reduce the production by 9.7 million b/s since August, and weakened restrictions to 7.7 million b/s. The fact that the growth of quotas intended from the beginning of January another 2 million b/s will be canceled, it was a question in October, when Saudi Arabia indicated the growth of prey in Libya and Iraq. In today's forecast there are statistics on these countries: in October, they only increased the prey by 450 thousand b/s.

In early November, ex-Minister of Energy Alexander Novak brought to the attention of Russian oil companies that the most likely script is the extension of current quotas for the first quarter of 2021. For Russia, this means the loss of 500 thousand b/s potential production.

At the November meeting, even tightening quotas is not excluded - today the Minister of Oil Algeria publicly said about this.

Brent oil quotes today reached $ 45 per barrel at the certainty of the outcome of the US presidential election and the news about the Pfizer vaccine. But, firstly, even this mark is below the one on which the budgets of most OPEC countries are balanced. Secondly, even the most successful vaccination will not affect at least six months on the trends of the oil market, experts say.

Separately, the IEA published a forecast according to which the capacities of renewable generation (wind, sun, hydroelectric power station) will already overtake coal generation, which still remains the main world source of electricity. This will happen due to ahead of growth, which will be 7% this year and 10% in 2021.