“Based on the average projections of various institutions, including OPEC, EIA and the IEA, it is estimated that the world will reach about 97% of pre-pandemic oil demand during the 4th quarter - which is a big recovery from the huge falls in April and May,” said Abdulaziz prior to the start of the meeting.
OPEC welcomed the significant performance in overall conformity for participating OPEC and non-OPEC countries, which was recorded at 97% in July 2020, including Mexico as per the secondary sources.
The members reaffirmed their commitment to achieve full and timely conformity. In addition, the underperforming members reaffirmed their commitment to compensate for the shortfalls in May, June, and July 2020 by the end of September 2020.
The meeting observed that there are some signs of gradually improving market conditions, including the inventory build in July 2020 being reversed and the lessening of the gap between global oil demand and supply. Nevertheless, the pace of recovery appeared to be slower than anticipated with growing risks of a prolonged wave of COVID-19.
Rystad Energy’s Paola Masiu said, “One thing is for sure. You can’t call OPEC+ a pessimistic alliance. OPEC continues its optimistic view and key members see demand already nearing pre-pandemic levels in Q4. While OPEC+ seem to assume that the market will close the year almost balanced and draws will become the norm left and right, we see the market returning to a mini-glut.”
Masiu added, “Our liquids balances suggest moderate oversupply in the next 3 months as our base case scenario now includes a mild effect of a 2nd wave of the pandemic. And demand just cannot recover as quickly when restrictions are in place. Even if industry resumes, transport, namely aviation and road fuels, cannot keep up oil consumption in such conditions.”