Demand Issues to Overshadow OPEC Supply Next Year


The Organization of the Petroleum Exporting Countries OPEC and its allies will have to contend with a lot of demand issues before raising supply in January 2021, given throughput cuts by oil refiners, the head of Saudi Aramcos trading arm said.

OPEC and its allies plan to raise production by 2 million barrels per day bpd from January after record output cuts this year as the coronavirus pandemic hammered demand, taking overall reductions to about 5.7 million bpd.

We see stress in refining margins and see a lot of refineries either cutting their refining capacity to 5060 or a lot of refineries closing, Ibrahim AlBuainain said an interview with Gulf Intelligence released on Wednesday.

I dont think the refining business is sustainable at these rates refining margins.

However, Chinese oil demand is likely to remain solid through the fourth quarter and into 2021 as its economy grows while the rest of the world is in negative territory, he added.

Among the uncertainties facing the oil market are rising Libyan output on the supply side and a second wave of global COVID19 infections, especially in Europe, on the demand side, AlBuainain said.

Complicating efforts by other OPEC members and allies to curb output, Libyan production is expected to rebound to 1 million bpd in the coming weeks.

Reporting by Arpan Varghese and Eileen Soreng in Bengaluru and Roslan Roslan Khasawneh in Singapore; Editing by David Goodman

Source Reuters


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