LONDON – OPEC’s forecasts point to an oil supply deficit in August and in the rest of 2021 as economies recover from the pandemic, suggesting the group and its allies have room to raise output at a meeting this week.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is returning 2.1 million barrels per day (bpd), about 2 percent of world output, to the market from May through July as part of a plan to ease last year’s record output curbs.
OPEC+ meets on Thursday to discuss supply for later months. With oil at its highest since 2018, sources say a further boost in August will be discussed, but some producers are wary about new demand setbacks and higher Iranian supply.
OPEC’s latest forecast of the demand for its crude suggests, if output levels stay the same, OPEC supply will fall short of expected demand by 1.5 million bpd in August. The shortfall widens to 2.2 million bpd in the fourth quarter.
OPEC+ cut output by a record 9.7 million bpd last year as demand collapsed when the pandemic first struck.
As of July, the curbs in place will stand at 5.8 million bpd.
Oil prices slipped for a second day on Tuesday on worries about slower fuel demand g rowth as outbreaks of the highly contagious COVID-19 variant Delta sparked new mobility restrictions around the world.
US West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.2 percent, to $72.77 a barrel, extending a 1.5 percent loss on Monday.
Brent crude futures dipped 10 cents, or 0.1 percent, to $74.58 a barrel, after sliding 2 percent on Monday.
The flare-up in cases of the Delta variant comes as the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+, are set to meet on July 1 to discuss easing their supply curbs.
OPEC’s demand forecasts show that in the fourth quarter global oil supply will fall short of demand by 2.2 million barrels per day (bpd), giving the producers some room to agree to add output.
“Oil prices fell on concerns that OPEC+ will decide to meaningfully boost output later this week just as the Delta variant of the coronavirus spreads,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.
Spain and Portugal, favorite summer holiday destinations for Europeans, imposed new restrictions on unvaccinated Britons on Monday, while 80 percent of Australians faced tighter curbs due to flare-ups of the virus across the country.
Talks on a travel corridor between the United States and Britain also slowed, partly on concerns about a rise in cases of the Delta variant in Britain, the Financial Times reported, citing officials.
