Crude Oil Price Outlook: Upside Risk as OPEC+ Meets to Discuss Output
Crude oil price, news and analysis:
- OPEC and its allies including Russia meet this week to reconsider their plan to ease their curbs on crude oil production from May 1.
- The so-called OPEC+ group is widely expected to ease the restrictions as planned; the risk is that the easing is put on hold because of concerns about demand from countries like India that are struggling to contain the spread of Covid-19.
- That would be positive for the crude oil price.
Crude oil price to rise if OPEC+ changes its plans
The OPEC+ group of crude oil exporters that includes Russia is meeting this week and is widely expected to reconsider an easing of the curbs on production introduced by members to offset lower global demand because of the coronavirus pandemic.
The group is planning to ease those output curbs by 350,000 barrels per day in May, another 350,000 bpd in June and further 400,000 bpd or so in July. Most analysts expect that easing of the production restrictions to proceed as planned.
However, there is also a risk that the easing is put on hold because of concerns about demand from countries such as India – the world’s third-largest crude importer – Brazil and Japan because of the spread of coronavirus there. That would be positive for the crude oil price.
Crude Oil Price Chart, Daily Timeframe (January 4 – April 14, 2021)
Source: IG (You can click on it for a larger image)
For now, forecasts of a recovery in global oil demand despite the problems in India and elsewhere should be sufficient to persuade OPEC+ that the output curbs can be safely reduced. Ahead of this week’s meeting of the OPEC+ monitoring committee, its technical experts have reportedly projected a strong recovery in demand despite the Covid-19 situation in India so there is no need to change course.
However, there is still a small risk that the committee disagrees and keeps its current curbs in place – a near-term positive for prices.
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
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