The oil market will record a small surplus of 400,000 barrels per day in 2022, much less than previously forecast, according to OPEC+ sources, due to lower production by members of the group.
The Joint Technical Committee (JTC), which met on Wednesday, advises the Organization of the Petroleum Exporting Countries and its Russia-led allies, known collectively as OPEC+, on market fundamentals.
Ahead of its meeting on Wednesday, the JTC had published a paper, seen by Reuters, suggesting the oil market surplus would amount to 900,000 barrels per day (bpd) at best.
Following the meeting, the figure stood at 400,000 bpd, two OPEC+ sources said, as the group decided to include significant underproduction figures from its own members in balance sheets.
OPEC+ is ready to cut output amid futures market volatility, fueled by tight liquidity and a disconnect with physical markets, Saudi Energy Minister Prince Abdulaziz bin Salman said last week.
Five sources told Reuters that debate on production policy beyond September and whether the group will cut output has yet to start.
At its last meeting, OPEC+ agreed to raise production targets by 100,000 bpd for September, after undoing record cuts of some 10 million bpd it made in 2020 to help offset the impact of the pandemic.
JTC data shows that oil demand, forecast to rise by 3.1 million bpd this year, faces significant uncertainties, especially from rising inflation and central bank tightening of monetary policy. , which is affecting consumer budgets.
“The increase in energy prices poses another risk for the future,” says the report. “The latter may lead to a more significant reduction in consumption than currently expected, especially towards the end of the year.”