OPEC Signals Resolve to Support Market With In-Person Meeting: RBC

The OPEC+ decision to proceed with an in-person meeting in Vienna next month, rather than online session, advertises group’s resolve to defend oil markets, RBC’s Head of Commodity Strategy, Helima Croft, said.

• OPEC+ has only held one physical meeting since the outbreak of the Covid-19 pandemic in early 2020, with the rest of its sessions since then taking place virtually. Convening in-person gives ministers greater scope for discreet negotiations.
• The “efficacy of OPEC action has come into question again” as oil prices slump despite latest supply cuts by key members, Croft said.
• “The OPEC leadership is signalling that they are prepared to midwife the recovery in oil prices until both demand and macro worries subside,” Croft added.
• “If Brent prices remain in their current range or move a leg lower, we think OPEC would be prepared to take additional action to put in a price floor and scare off the shorts until fundamental factors become clear.”
• “Policy makers in key producing countries remain extremely focused on ensuring that they have sufficient funds to deliver on their ambitious development plans.”
• OPEC members and its partners announced an additional 1.2mbpd cutback that came into effect on 1 May. That follows a 2mbpd supply reduction announced in November.