LONDON- OPEC’s secretary general said an oil market recovery may take longer than hoped as coronavirus inflections rise around the world, and OPEC and its allies would “stay the course” in balancing the market.
The Organization of the Petroleum Exporting Countries and allies including Russia made a record oil output cut in April as the pandemic hit demand. They are scheduled to increase output in January as part of a gradual easing of supply curbs.
Oil prices regained a semblance of stability on Tuesday after suffering sharp losses over the previous session and last week, as a resurgence of coronavirus cases globally hit prospects for crude demand while increasing supply also hurt sentiment.
The gloomy backdrop is set to keep prices under pressure over the coming day.
OPEC’s Mohammad Barkindo, asked at the virtual India Energy Forum by CERAWeek if the second wave of the virus required any changes to OPEC+ strategy, said hopes earlier this year of a demand rebound had been disappointed.
“We were hopeful the second half of 2020 would begin to see a recovery,” Barkindo said. “Unfortunately, both the economic growth and demand recovery remain anaemic at the moment due largely to the virus.”
“We remain cautiously optimistic that the recovery will continue.
It may take longer, maybe at lower levels, but we are determined to stay the course,” Barkindo added.
Russian President Vladimir Putin, speaking last Thursday, did not rule out extending the oil cuts for longer if market conditions warranted.
Barkindo said producers did not expect a renewed oil-price collapse as seen in the second quarter, when oil hit historic lows with US crude briefly trading in negative territory.
OPEC+ producers had met an average of 100 percent of their supply cut commitments and would continue to implement the curbs so that inventories fall further, Barkindo said.
“We are determined to assist the market to restore stability by ensuring that the stock drawdowns continue.”
In early Asia, Brent crude was up 12 cents, or 0.3 percent, at $40.58 a barrel, having dropped more than 3 percent overnight. US oil was up 13 cents, or 03 percent, at $38.69 a barrel, after also declining more than 3 percent on Monday.
“The market is under pressure from a toxic brew of no stimulus, rapidly increasing coronavirus cases, and the surprise increase of oil production in Libya,” Bob Yawger, director of energy futures at Mizuho Securities.
Prices got some support from the potential drop in US production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.