OPEC and its allies expect global oil demand to usher in a strong recovery this year, but the recent outbreak of the epidemic in India has cast a shadow on the oil outlook.
OPEC expects oil consumption to increase by 6 million barrels per day this year, a source said on Monday. They estimate that by the end of the quarter, the surplus in fuel inventories built up during the pandemic will be depleted.
Last year, when the global pandemic suppressed fuel demand, the Saudi-Russian OPEC saved the global oil industry from plummeting prices by cutting production. OPEC and its allies are now rethinking oil supplies as economic activity resumes. OPEC Secretary-General Barkindo said at the meeting: “There are positive signals for the world’s economic recovery and the prospects for the oil industry.”
OPEC+ Joint Technical Committee (JTC) for 2021 oil The forecast for demand growth is more optimistic than the 5.6 million barrels per day announced a month ago and is broadly in line with a report released by the OPEC Secretariat a few weeks ago.
JTC data shows that the oil inventory surplus will decrease to 8 million barrels by the end of the quarter. One of OPEC’s main goals is to consume the world’s excess oil reserves.
Helima Croft, chief commodities strategist at RBC Capital Markets LLC, said in a report: “We still believe that oil-producing countries are likely to continue to gradually increase production. However, considering Due to the epidemic situation in India, we do not rule out the possibility of OPEC+ suspending its production increase plan.”
The epidemic in India is giving oil a recovery Tim Du
Recently, the number of confirmed cases in India has surged. What impact will this have on the macro economy?
JTC warned that the resurgence of the epidemic in India, Brazil and Japan may have an adverse impact on global economic growth. The worsening epidemic situation in these countries may affect the recovery of oil demand.
India is the third largest oil consumer in the world, after the United States and China. Just a few weeks ago, India was considering restarting its economy to revive oil demand, pushing up oil prices.
However, it is obvious that when Indian Prime Minister Moody began to relax his vigilance, declared that India had defeated the epidemic, and allowed large-scale election rallies to be held, the epidemic in India began to deteriorate. .
Foreign media reporter David Fickling said that the current situation in India means that more people may die from COVID-19 this year than last year. The country’s death toll may be several times higher than official figures indicate.
India’s confirmed cases of COVID-19 have surpassed the peak in the United States and are still rising.
Oil prices peaked in early March but have fallen since then. Maybe it’s just a coincidence, but since the number of confirmed cases in India started to climb, oil prices stopped rising and the rupee obviously took a huge hit.
The Crude Oil Volatility Index (OVX) has declined over the past few trading days, but remains above recent lows.
Oil prices move in the opposite direction to the S&P 500 Index.
The above charts are from Refinitiv
The income statement of the SPDR Energy Index Fund (XLE) has turned negative. The fund is based on Deals undertaken as the economy reopened were underperforming.
Despite XLE’s underperformance, the XLE Volatility Index (VXXLE) is up from its lows, but has been slightly lower recently. If the epidemic in India has a negative impact on oil demand, the OVX and VXXLE indexes may ultimately benefit. Financial blog Zero Hedge believes it would be very interesting to go long XLE volatility at current levels.
Sources said that the OPEC+ Joint Ministerial Supervisory Committee meeting will be held at 8 pm on Tuesday (April 27), Beijing time. It was held at 11:00 a.m., one day earlier than originally planned. This meeting will be held via telephone conference. The ministerial meeting originally scheduled for Wednesday (April 28) has been cancelled.
At the meeting, they will discuss whether it is safe to resume the oil production increase plan. The organization’s current goal is to restore about 2 million barrels per day of oil production in the next three months, about a quarter of the currently suspended production.
The committee expects global fuel inventories to decline at an average rate of 1.2 million barrels per day this year, higher than the previous year. 800,000 barrels per day per month. </p
