On Monday’s talks over the phone, Saudi Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin discussed OPEC+ cooperation with particular focus on the necessity to maintain the stability of crude oil prices ahead of a virtual OPEC+ meeting scheduled for Wednesday.
Wednesday meeting, which will take place at 1100 GMT, is a meeting of OPEC+ ministers only, otherwise referred to as the Joint Ministerial Monitoring Committee (JMMC). Another meeting of the OPEC+ join technical committee (JTC) originally scheduled for January 31st, has been canceled.
Chinese demand will be a key feature of Wednesday’s virtual meeting via zoom. Last week that changes to the current output policy are unlikely due to the rebound in oil prices so far this year. Oil prices were trading lower on Monday ahead of the OPEC+ meeting and awaited Fed’s decision on interest rates in the United States on Wednesday as well.
Russian oil output has held up in spite of new Western sanctions and price caps, and three OPEC+ delegates told Reuters that the Wednesday meeting is likely to conclude without any output policy changes. At 10:19 a.m. EST on Monday, Brent crude was trading down 0.83%, at $85.94 per barrel, while WTI was trading down 0.92% on the day, at $78.95 per barrel.
With uncertainties about Chinese demand and Russian supply in February and March as a dimmed background, OPEC+ is extensively expected to keep the current output levels, which diminished target output by 2 million barrels per day from November on.
So far, the actual cut is estimated to have been around 1 million bpd. In December, OPEC-13’s average December output surged by 91,000 bpd, to 28.971 million bpd, with nearly all of the gains coming from Nigeria. December’s OPEC-10 output was still substantially below the output quota, with the group underproducing by more than 800,000 barrels per day.
The Joint Ministerial Monitoring Committee (JMMC) is reportedly unlikely to recommend any changes to oil output policy on February 01 meeting.
Apart from the OPEC+ and China concerns, the recently increasing odds of the Fed’s approaching monetary policy pivot also adds strength to the WTI crude oil. During the last week, the better-than-expected fourth-quarter (Q4) Gross Domestic Product (GDP) and the PCE, inflation data for December, gained widespread attention. The actual releases were softer than their previous outcomes and of course signaled that the Fed front-loading of interest rates has finally helped exert downside pressure on spending and inflation fears.
However, the cautious sentiment ahead of the Fed meeting, OPEC+ JMMC decision and the US employment data for January, on Friday, not to forget China’s official activity numbers for January, seem to raise several questions on the part of most Oil buyers.
Home / Market Update / Commodities / OPEC+ Meeting Preview: What does oil market expect following Russian-Saudi talks on oil strategy?
Tags China demand FED OPEC+ russia Saudi Arabia WTI crude oil
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