Opec-Plus Panel Discusses India's Covid Surge

Opec-plus technical experts talked on Monday about surging coronavirus cases in India and the effect this might have on oil demand and prices, according to delegates who attended the virtual meeting. The alliance's Joint Technical Committee (JTC) -- an advisory body -- met ahead of an online meeting of the Joint Ministerial Monitoring Committee (JMMC), now scheduled for Tuesday, and a plenary ministerial meeting planned for Wednesday. Delegates said representatives of both Saudi Arabia and Russia expressed concerns about a new wave of lockdowns in India -- the world's third-biggest oil importer -- and their impact on demand. Other delegates indicated that despite the dramatic rise in Covid-19 cases in India, it was too early to say what impact this would have in terms of the global balance between supply and demand. Benchmark Brent crude futures continued to trade in the mid-$60s per barrel on Monday. It's unclear whether Opec-plus ministers will decide to adjust their production policy on Wednesday, but some delegates said it would be too early to make substantive changes to their recent decision to raise output gradually in May-July (IOD Apr.1'21). "I feel there will be no surprises so far," said one delegate. However, some of the alliance's recent meetings have in fact produced surprise decisions (IOD Mar.31'21). Scenarios and Inventories The JTC's base case scenario -- which aligns with the Opec Secretariat's most recent projections -- shows global oil demand growing by 5.95 million barrels per day to 96.5 million b/d this year, although the committee also examined an alternative scenario with lower demand. Under the base case scenario, OECD commercial oil stocks -- estimated to have ended the first quarter of this year at 77 million barrels above the 2015-19 average -- are seen falling to a surplus of 8 million bbl at the end of the second quarter. And by year's end, OECD commercial stocks are expected to stand at 70 million bbl below the five-year average under that scenario, according to Opec-plus delegates. Under the lower-demand scenario, OECD commercial stocks are seen falling to 51 million bbl above the five-year OECD average at the end of the second quarter, but rising to 84 million bbl above the average by year's end. During Monday's JTC meeting, Opec Secretary-General Mohammed Barkindo said the global economy was continuing to show encouraging signs of recovery. However, he underscored the need to remain vigilant because the outlook remains uncertain. Barkindo also highlighted the importance of a robust and inclusive vaccination drive across the globe. Amena Bakr, Dubai