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OPEC & allies to meet on output direction
Oil producer club, OPEC and its allies are scheduled to hold a technical meeting on Wednesday, where members will either confirm or tweak output plans, following the group's decision to gradually ease production cuts earlier in April. Meanwhile, oil prices are down by almost a dollar, on fears that rising COVID-19 cases in India will put a dent on oil demand recovery. Uchenna Minnis, Managing Director of Howard Minnis Asset Management joins CNBC Africa for more.
Mon, 26 Apr 2021 11:43:26 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- OPEC faces challenges in forecasting oil demand amidst uncertainties surrounding the COVID-19 pandemic and the impact of rising cases in India, necessitating caution in production decisions.
- The delicate balance between supply and demand dynamics underscores the complexity of OPEC's task in navigating evolving market conditions and geopolitical factors.
- External pressures, including legislative measures targeting OPEC's pricing policies, add layers of complexity to the energy market, requiring vigilance and adaptability from OPEC and its member countries.
Oil producer club OPEC and its allies are set to convene for a technical meeting this week to discuss the direction of output following the group's decision to gradually ease production cuts. The meeting comes at a time when oil prices are on the decline, driven by concerns over the impact of rising COVID-19 cases in India on global oil demand recovery. Uchenna Minnis, the Managing Director of Howard Minnis Asset Management, shared insights on the current developments impacting the oil market. OPEC has raised its oil demand outlook for 2021 but is facing challenges in forecasting demand amid uncertainties surrounding the pandemic. The group anticipates an average daily consumption of 96.4 million barrels this year, highlighting the delicate balance between supply and demand dynamics. With the unfolding crisis in India, OPEC must navigate the evolving landscape while considering factors such as easing lockdowns and vaccine rollouts. The situation in India presents a challenge to OPEC's optimistic demand projections, leading the group to exercise caution in its production decisions. The complex interplay of variables makes it difficult for OPEC to arrive at a definitive demand forecast for the year. Minnis emphasized the speculative nature of current estimates, noting the unpredictability of the market given the unprecedented circumstances. While the global oil market has shown signs of improvement compared to 2020, uncertainties persist, underscoring the importance of vigilance in supply adjustments by member countries. The U.S. Congress's push for legislation targeting OPEC's pricing policies adds another layer of complexity to the situation, with implications for global oil markets and consumers. As OPEC grapples with external pressures, the organization must proceed with caution to mitigate potential disruptions to oil prices and market stability. In addition to international developments, Minnis commented on domestic issues in Nigeria, specifically the revocation of licenses related to OML 123 by the NMPC and the Federal Government. The decision, seen as politically motivated, may have minimal impact on Nigeria's overall production given the country's commitment to OPEC's production quotas. Despite the ongoing regulatory challenges, Nigeria aims to uphold its production targets and navigate the evolving energy landscape. Looking ahead, Minnis foresees oil prices remaining within the $60 range, with the potential for further modest increases depending on market conditions and OPEC's upcoming decisions. The volatility of the oil market underscores the need for flexibility and resilience in navigating the challenges posed by the ongoing pandemic and geopolitical developments. The outcome of the upcoming JTC and OPEC meetings will play a crucial role in shaping the trajectory of oil prices in the near term, reflecting the delicate balancing act faced by the energy industry amid evolving global dynamics.
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