Vitol, Trafigura and Janvor, one of the major global oil trading companies, said Thursday that they expected the recovery in oil demand to be slow due to the second wave of the new Corona virus outbreak.
The companies expected oil prices not to increase to $ 50 a barrel or more before October of next year.
By 09:05, benchmark Brent crude futures were trading at $ 42.62 a barrel, down 1.6%, at a time when new restrictions were imposed to curb a second wave of the outbreak, adding to uncertainty over prospects for economic growth and recovery in fuel demand.
The CEOs of the three companies made the remarks at the Energy Intelligence Forum.
They said that demand in Europe and the United States had probably passed its peak, but that they witnessed strong demand for oil and other primary commodities from China, whose economy appeared to have emerged strongly from the consequences of the pandemic crisis.
Two sources in OPEC + said that the group’s technical committee discussed Thursday the increase in oil supplies with the resumption of production in Libya, amid weak demand expectations in the coming months due to a second wave of infections with the Coronavirus.
The joint technical committee, which includes representatives of major OPEC + producers such as Saudi Arabia and Russia, held the meeting to review the extent of commitment to global oil production cuts and market conditions.
OPEC +, a group that includes producers from the Organization of the Petroleum Exporting Countries and others including Russia, has shrunk production since January 2017 in an effort to balance the market, support prices and reduce stocks.
They are now reducing production by 7.7 million barrels per day, down from 9.7 million barrels per day, and they are set to reduce the amount of production cuts by two million barrels per day next January.
But OPEC + sources say that the negative outlook for demand today and the rise in Libyan supplies mean that OPEC + may extend the current cuts next year and delay the reduction of cuts.
Two OPEC + sources told Reuters that the group’s commitment to production cuts last September amounted to 102%.
One of the sources said that OPEC + delegates discussed the slow recovery of demand in the fourth quarter of this year, while expectations were that it would rise due to seasonal factors.
He added that the resumption of oil production from Libya and the absence of a vaccine for Covid-19 yet, while many countries face an increase in HIV infections and renewed restrictions in the effort to contain the pandemic may mean a possible review of oil demand, which creates negative expectations for the market in the coming months.
The source said that the committee discussed data showing a surplus offered over the course of 2021, with stocks of OECD countries increasing 301 million barrels above the latest average in 5 years in the last quarter, compared with 245, 181 and 173 in the previous three quarters.
The group will hold a ministerial meeting on the 30th of November and the first of December next to determine the policies.
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