Opec likely to delay putting extra oil on market: MUFG

Opec likely to delay putting extra oil on market: MUFG

Given the expected year-end oil market surplus, and prevailing elevated demand uncertainty stemming from the virus, Opec+ may delay by 3 months its January production ramp-up by 1.9m barrels per day (b/d) to 5.8m b/d when it meets at the end of the month, a report said.

"This will help bring the market back to a narrow 0.9m b/d market deficit in Q1 2021, when we forecast Brent prices to rise to $49/b by March 2021. Thus on balance, a 3 month delay to April will provide the group breathing space to adjust its reaction function to market conditions once the COVID-19 winter speed bump is behind us,“ said the latest Mena Economic Weekly from the Mitsubishi UFJ Financial Group (MUFG), a leading Japanese financial services provider.

"As such, we do not anticipate much price action post-meeting given that a 3 months extension is baked in, with the group continuing its modus operandi strategy of supporting prices over defending market share through its active oil market intervention policy to effectively carve out an Opec+ floor in oil prices.“

Beyond the decision, the group's communication strategy will be central in determining the near-term direction of oil prices. The more united, coherent and coordinated (and