OPEC+ Alterations Amidst Additional Oversupply

For the 2021 calendar year, there will be 5.8 million barrels per day crude production cuts. These cuts are an effort to balance the current oversupply due to COVID-19 with an estimated demand forecast for the year.

Recently OPEC+ is discussing the idea of increasing the cuts in accordance to adjusted demand forecasts. The estimated proposal for overall production cuts for the 2021 calendar year could be in excess of 7.7 million barrels per day. This indicates the current cuts combined with the recent surge in COVID-19 cases have not proven to be enough to curtail the consistent over supply on the global crude markets.

In the US alone, daily averages have increased to 100k cases daily over the last week. Hospitals are feeling the stress with the increase in caseloads. Just a few months ago, we had all bought into the “flattening-the-curve” but have since forgotten the necessary practices to keep COVID-19 at bay.   With the UK experiencing a strong second wave 1st hand, how long will it be until the US encounters the same or encourages a curfew across the country to protect the American people from ourselves? Europe is currently accounting for half of the daily death toll from the virus and is attempting to make corrective actions by announcing their 4-week lockdown. This will undoubtedly add to the glut of underutilized crude which would seemingly drive prices down with an even more drastic supply glut.

While suppressed prices seem good for the consumer today, if margins remain historically low this could eventually push out competition in the market so when the demand returns, there could be an immediate steep increase, and flip the consumer prices 180 degrees.





Written by:

I am a proud Guttman Energy sales representative, who has a thirst of knowledge for the industry. I come from a strict, service based, industry that allows me to put my customer needs first. I look forward to utilizing my passion and past experience to help bolster my client’s operations. I take a personal pride in anything I do.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.