OPEC+ to boost output as oil market tightens: Kemp

OPEC+ to boost output as oil market tightens: Kemp

The shift responds to news of successful coronavirus vaccine trials, which could lead to a rapid immunisation programme and resumption of more normal business activity and international air travel.Brent futures prices have already climbed by more than $11 per barrel (30%) since the start of November as traders anticipate a faster recovery in oil consumption and a sharper drawdown in global inventories.And Brent's six-month calendar spread has moved into backwardation of more than $0.40 per barrel, from a contango of $2.50 at the start of November, as traders expect a larger production-consumption deficit in 2021.Spreads for every month next year have moved into backwardation, which will prompt traders and refiners to empty tank farms of discretionary inventories, keeping only the minimum needed to maintain reliable operations.The combination of rising spot prices and tightening spreads is the most bullish since early January, when U.S.-China trade tensions were easing and before the risk of a devastating global pandemic was appreciated.The combination of rapidly tightening spreads and an intensifying backwardation indicates the oil market is expected to tighten significantly next year and that benchmark prices are accelerating towards a peak.In this context, OPEC+ members had more scope than a few weeks ago to