OPEC to keep any increase in oil output gradual amid uncertain backdrop – ANZ

FXStreet reports that strategists at ANZ Bank suspect OPEC will be inclined to keep most of the output curbs in place for another month when they meet later this week.

“Overall, the physical market remains well supplied. We see global growth in crude oil demand remaining subdued; with Q1 2021 levels still nearly 5mb/d below the same period last year. Nevertheless, we expect a strong recovery in oil demand for the rest of the year.”

“As the pace of the vaccine deployment accelerates, we see Q2 demand rising 1.3mb/d in y/y terms from the previous quarter. We expect the Saudis to extend their unilateral cut again and OPEC+ to roll over most of its April quota for May. However, the concessions ceded to Russia and Kazakhstan are likely to be repeated. We also expect compliance will start to slip. This has led us to revise lower our forecasts for global supply by 1.2mb/d for Q2 and about 0.2mb/d for full year 2021 compared to last month’s case. For 2022, we have raised supply forecasts by 0.5mb/d on higher US production.”

“We expect the increase in OPEC production to remain gradual until there are clear signs that demand has recovered and supply risks have eased. Until that scenario, the market will likely remain tight through 2021.”