GRAPHIC-Brent near $60 as OPEC+ cuts tighten oil market
By Ahmad Ghaddar
LONDON, Feb 5 (Reuters) - Brent crude prices LCOc1 are approaching $60 a barrel, a one-year high, driven in large part by OPEC+ cuts that are set to keep the oil market in deficit this year.
The coronovirus pandemic ravaged oil demand as economies around the world had to shut down for extended periods of time to curb the spread of the virus.
But the oil market is on a bull run, despite renewed lockdowns in Europe and Asia to curb second and third waves of the virus.
A look at Brent crude time spreads also paints a picture of a tight market.
The six-month Brent spread LCOc1-LCOc7 reached about $2.4 a barrel backwardation on Friday, its widest in a year. Backwardation is when prices on the prompt trade at a premium to future prices, and usually encourages traders to take oil out of storage, signalling a stronger market.
OPEC+ has made it clear that it intends to rein in bloated oil inventory levels that the pandemic brought about.
The group's base-case scenario shows that the oil market will be in a deficit throughout 2021, with inventories in the industrialised world expected to fall below the 2016-2020 average in the second half of the year.
Strong compliance with agreed oil cuts by OPEC+ have also helped support prices, although some countries participating in the cuts are yet to make good on compensating for their overproduction.
In December, cumulative overproduction hit 2.69 million barrels per day, OPEC+ data shows, compared with 2.46 million bpd in November, with the increase coming largely from higher production from non-OPEC members Russia, Kazakhstan and South Sudan.
Brent Crude Priceshttps://tmsnrt.rs/39QhbiH
Brent Time Spreadshttps://tmsnrt.rs/3pTyCV4
World Oil Demand and Supplyhttps://tmsnrt.rs/39DrK8O
OECD Oil Stocks OECD Oil Stockshttps://tmsnrt.rs/2MUPNa7
Oil Market Balance - OPEC+ base case scenariohttps://tmsnrt.rs/3oH4NG7
OPEC+ Compliance with Production Cuts (%)https://tmsnrt.rs/3cD4qKc
OPEC Cumulative Overproductionhttps://tmsnrt.rs/3joJCri
Non-OPEC Cumulative Overproductionhttps://tmsnrt.rs/3cCdC1v
Cumulative OPEC+ Overproductionhttps://tmsnrt.rs/3oLRwMs
OPEC+ Overproduction Compensation Planshttps://tmsnrt.rs/3pUKYws
OPEC+ Compliance with Production Cuts (%)https://tmsnrt.rs/3pMTkpC
Cumulative OPEC+ Overproductionhttps://tmsnrt.rs/2YJaZmf
Brent Crude Priceshttps://tmsnrt.rs/2N1YZtG
Brent Time Spreadshttps://tmsnrt.rs/3rlm5Kz
(Reporting by Ahmad Ghaddar; Editing by Susan Fenton)