Oil prices rose on Monday ahead of an Opec+ meeting as the alliance led by Saudi Arabia and Russia assesses the production curbs over the next few months.
Brent, the global benchmark for two-thirds of the world's oil, rose 2.22 per cent to $52.95 per barrel at 11:46am UAE time. US crude gauge West Texas Intermediate rose 2.08 per cent to $49.53 per barrel.
Opec+, whose meeting comes amid a rising tally of Covid-19 cases, will discuss the current level of compliance to its output restriction pact and accordingly decide on further potential production increases.
Globally, coronavirus cases climbed to more than 85 million as of Monday, according to Worldometer, which tracks the pandemic. Analysts say the second wave of coronavirus in major economies and subsequent restriction on movement to curb the spread, may dent crude demand.
The group reached an historic agreement to cut back output by 9.7 million barrels per day in April to counter a record drop in crude demand due to Covid-19 related travel restrictions.
Opec+ has since scaled back its level of curbs after assessing energy demand. The alliance decided to increase production by 500,000 barrels per day in January, anticipating a boost in demand, and agreed to meet every month to review production.
“Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” Opec secretary general, Mohammad Barkindo, said in a statement late on Sunday. “We are only beginning to emerge from a year of deep investment cuts, huge job losses and the worst crude oil demand destruction on record.”
He expects crude oil demand to shift from “reverse to forward gear and rise to 95.9m bpd this year, a gain of 5.9m bpd from 2020”.
“The non-OECD [countries] will be in the driver’s seat with growth of around 3.3m bpd.”
The coronavirus pandemic brought the global, trade, travel and tourism industries to a halt and has tipped the global economy into a recession, the deepest since the Great Depression, according to the International Monetary Fund.
“The open questions about the future point to the need for the DoC (Declaration of Cooperation) participating countries to stay the course and remain faithful to our commitment to full conformity, and to compensate for earlier overproduction,” Mr Barkindo said.