OPEC+ JMMC compliance may be good, but markets only held because of Saudi cuts
Cornelia Meyer
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It is that time of the month: OPEC+ (an alliance between OPEC and 10 nations led by Russia) is set to hold its monthly Joint Ministerial Monitoring Committee (JMMC) meeting where ministers led by Saudi Energy Minister Prince Abdul Aziz bin Salman and Russia’s Deputy Prime Minister Alexander Novak monitor compliance with the organization’s production regime.
The outcome is expected to be positive a compliance of about 99 percent for the group or thereabouts. In January, compliance for the group stood above 100 percent.
DUBAI: Oil prices surged back to pre-pandemic levels on Tuesday in the wake of Saudi Arabia’s surprise decision last week to cut output by an extra 1 million barrels a day. Brent crude, the international benchmark, rose above $56 a barrel for the first time since February 2020, before economic lockdowns hit worldwide demand for oil, especially transport fuels. After a divided meeting last week of OPEC+, the alliance led by Saudi Arabia and Russia, Saudi Energy Minister Prince Abdul Aziz bin Salman promised to cut an extra 1 million barrels for the next two months as a “gesture of goodwill” to global energy markets. “We will support the market and we will support the industry. We are the guardians of the industry,” he said.
Oil Prices Rise After Saudi Arabia Announces Production Cut The Media Line Staff 01/06/2021
Oil prices continued to rise on Wednesday, a day after Saudi Arabia announced that it would cut production.
The Saudi Energy Minister Prince Abdul Aziz bin Salman called the voluntary cut a “gesture of goodwill” to support the global crude markets, during a meeting of the OPEC+ alliance. The cut includes one million barrels per day in February and March, as well as other agreed-upon reductions in production.
Brent crude rose 1.6% to $54.45 a barrel on Wednesday morning after a rise of 5% on Tuesday following the Saudi announcement. U.S. West Texas Intermediate (WTI) futures were up 1%, to $50.45 a barrel. Both are the highest prices since Feb. 26, 2020.
Saudi Arabia leads by example in its role as guardian of the oil industry
Faisal Faeq
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Saudi Energy Minister Prince Abdul Aziz bin Salman speaks via video link during an OPEC+ meeting, Riyadh, Saudi Arabia, April 9, 2020. (Reuters)
The recent upward momentum in oil prices did not tempt OPEC+ to increase production this week, even as the price of WTI rises above $50 a barrel for the first time in a year.
The group, which includes the OPEC countries and 10 non-OPEC allies, unanimously agreed to leave previously agreed output cuts relatively unchanged during the first quarter of the year.
Jan. 4 OPEC+ meeting: Will they or won’t they up production in February?
Cornelia Meyer
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Most people in the oil industry will want to forget 2020. The coronavirus pandemic and lockdowns brought the global economy to a standstill. In April, the US benchmark West Texas Intermediate (WTI) briefly turned negative.
While demand has recovered somewhat, the International Energy Agency estimated it was 8.8 million barrels per day (bpd) below 2019 levels in 2020. This year we are still poised for a decline of 3.1 million bpd below 2019 levels.
The year was hard for international oil companies Exxon was delisted from the Dow Jones at the end of August while shale producers saw several bankruptcies of which Chesapeake might have been the highest profile. It was hard for national oil companies (NOCs), too. They were not immune from slashing capital expenditure, which is unheard of for NOCs in the GCC.