OPEC

The alliance ratified another modest daily production increase of 400,000 barrels.

Oil production in the US is resurging and poised to refute some skeptics who believed domestic output peaked just prior to the COVID-19 pandemic.

Next month, the 23-nation group of crude exporters will raise its allowable production output by another 400,000 B/D.

Forecasts for oil demand are looking up. Will the optimistic views prove to be on target? We have learned how the market can shift or wildly careen, both historically and in the very recent past. The outlooks, which reflect a consensus of sorts, is encouraging for producers.

Saudi Arabia will keep its voluntary 1 million-barrel cut intact while Russia allowed a small production increase.

Under the group’s historic April agreement, the easing of voluntary cuts would have been 2 million B/D, which would have been too much for markets to absorb.

The good news for next year is no one is predicting a repeat of what happened this year. The bad news is the outlooks offers little incentive to find any more oil.

The recent increase in global liquid fuel inventory has been largely driven by travel restrictions, and reduced economic activity. Supply is expected come back down as demand and prices recover.

Reductions will begin next month and last until June. After that, major oil producers around the world plan to step down from the cuts in phases that extend to 2022.

The notion that the state of Texas could help oil producers by limiting production at a time when the market is glutted has a real history in Texas, but an iffy future.