Oil Prices Plunge as JMMC Convenes Ahead of OPEC+ Meeting
Oil prices plunge early Tuesday as Joint Ministerial Monitoring Committee (JMMC) convenes ahead of the Organisation of Petroleum Exporting Countries and allies (OPEC+) meeting starting April 1, 2021.
Ministers of the world’s major oil-producing countries will convene Wednesday for the JMMC during which recommendations will be made for the following day’s 15th Ministerial Meeting of Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
Oil-producing countries are expected to determine whether to prolong or ease production cuts to balance the market that is still grappling with low oil demand amid rising virus cases in Europe.
International benchmark Brent crude was trading at $64.88 per barrel early on Tuesday after falling 0.06% from $64.92 a barrel on Monday.
American benchmark West Texas Intermediate (WTI) was at $61.52 per barrel at the same time for a 0.06 % drop after it ended the previous session at $61.56 a barrel.
Having recorded 13-month-highs by hitting over $71 a barrel when major oil producers agreed to maintain the production levels in April, oil prices have seen a declining trend in the last two weeks due to renewed coronavirus cases in European countries.
This was followed by more restrictions and/or lockdowns.
Investors are cautious before a decision is taken at the key two-day meeting of OPEC and non-OPEC oil-producing nations, like Russia, a grouping dubbed OPEC+, on their production cut strategy for May.
The market expectation is a further extension of production cuts into May in keeping with the oil cartel’s cautious strategy to balance the market.
The OPEC+ group is currently reducing production to 7.9 million barrels per day.
The freeing of the 400-meter-long ship (1,312-foot), Ever Given, in the Suez Canal, which blocked almost 30 oil tankers from making transit, initially increased oil prices but prices retreated and concerns were outweighed about the stuck ship over low oil demand from increasing coronavirus cases.
JMMC will also monitor the conformity levels to the voluntary production adjustments adopted at the previous OPEC and non-OPEC Ministerial Meeting, and review global oil market conditions and prospects.
However, the JMMC’s technical think-tank, the Joint Technical Committee (JTC) is scheduled to convene later on Tuesday via videoconference.
On March 4, OPEC+ members rolled over existing production quotas until April.
However, Kazakhstan and Russia were excluded and allowed marginal production increases by 130,000 and 20,000 bpd, respectively due to ongoing seasonal consumption patterns. Saudi Arabia also decided to keep its voluntary cut of 1 million barrels per day (bpd).
Including Russia and Kazakhstan’s output rise exemption, the group agreed to reduce its production by 7.9 billion bpd in April.
Previously in February and March, Russia and Kazakhstan collectively increased their output by 75,000 bpd while the rest of the group held output steady.
Oil Prices Plunge as JMMC Convenes ahead of OPEC+ Meeting