LONDON- OPEC+ maintained its oil output policy at a meeting on Wednesday, a sign producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the pandemic lingers.
A Joint Ministerial Monitoring Committee of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is “optimistic for (a) year of recovery in 2021,” OPEC said in a statement after the panel met virtually.
Oil has rallied from historic lows hit last year, thanks to record OPEC+ output cuts that the group is starting to unwind.
Global benchmark Brent extended gains after the meeting and rose towards $59 a barrel, its highest since late February 2020.
“While inventories are drawing fast, the market is pricing in a smooth rollout of vaccines and that may be premature,” said Amrita Sen, co-founder of Energy Aspects.
The OPEC+ panel made no mention of changing policy, which calls for most members to hold supply steady in February and top exporter Saudi Arabia to cut output voluntarily by 1 million barrels per day this month and next.
“While economic prospects and oil demand would remain uncertain in the coming months, the gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand,” OPEC’s statement said.