According to the report from Vienna on November 17, 2020, the Tass news agency of Russia quoted the document of the Joint Ministerial supervision committee, which monitors the implementation of the agreement on production reduction, that the extension of the OPEC + production reduction agreement for three to six months will lead to a deficit in the oil market next year.
According to these documents, OPEC is considering four possible scenarios for extending the oil agreement in 2021. Two of these cases are based on the original arrangements, including further easing of production cuts, from 7.7 million barrels per day in January to 5.8 million barrels per day.
In both cases, the global oil inventory will continue to decrease, but the total oil inventory will still be much higher than the five-year average. Under the novel coronavirus pneumonia novel coronavirus pneumonia, the oil inventory in 2021 will be 125 million barrels higher than the 5 year average level. Under the severe new crown pneumonia epidemic situation, the oil inventory in 2021 will be 470 million barrels higher than the 5 year average level. This will lead to an excess supply of 1.9 million B / D in the oil market.
But under more stringent production constraints, the reduction will be even greater: if the agreement is extended for three months to the end of March, global inventories will be only 73 million barrels higher than the five-year average by the end of next year. If the production reduction is extended to the end of June, the total crude oil inventory will be only 21 million barrels higher than the five-year average. These data translate into a supply gap of 900000 to 1.4 million barrels per day.
At the end of the OPEC + meeting on November 18, although some member states seemed willing to further reduce production from January next year to restore balance in the oil market, there was general support for an extension of the cut-off period for three months.