Oil prices held steady after a crucial meeting yesterday
between the oil producers that could set the tone of the global crude market
for the rest of the year. Brent crude traded just above $75 as ministers from
the 23-strong OPEC+ alliance, led by Saudi Arabia and Russia, prepared for one
of the most important meetings for many months. After their final round of
meeting the officials will decide whether to increase production against a
background of improving demand as the world climbs out of the pandemic
recession.
Oil expert Robin Mills, chief executive of the Qamar
Energy consultancy, mentioned that the market and forecasts are certainly signaling the need for more supply. However, the Energy Minister of Saudi
Arabia, Prince Abdul Aziz bin Salman, is inclined to favor a cautious approach
as the global market approaches rebalancing after the volatility of last year,
with new COVID-19 variants threatening an economic recovery in several
countries. He told a US investment forum that some forecasts for economic
recovery and oil demand growth could turn out to be excessively optimistic.
The prime oil organization, OPEC+ is believed to be
looking at a number of scenarios for the rest of the year. They will be
following a three-month deal that will see the production till August and
decide about the tone for the rest of the year. One option that lies is to
increase production by about 500,000 barrels a day in August, and the
possibility of locking that into another three-month period of graduated
increases.
Even India’s top oil refiners are reducing processing
runs and crude imports as the surging COVID-19 pandemic have cut fuel
consumption, leading to higher product stockpiles at the plants. Indian Oil
Corp, the country’s biggest refiner, has reduced runs to an average of between
85 per cent and 88 per cent of processing capacity.
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