Lower oil demand with the peak of coronavirus cases will likely prompt the OPEC + alliance to postpone current production cuts of 7.7 million b / d until 2021, instead of easing them by 2 million. b / d from January, the chairman of the Petroleum Association of Japan (PAJ) said on Friday. “Given declining demand for oil amid resurgence in COVID-19 infections, OPEC + is likely to maintain current brakes … after January,” PAJ Chairman Tsutomu said Sugimori, during a press conference. Reuters.
The market has largely integrated the price of an extension of current OPEC + cuts by three months until the end of the first quarter of 2021, and the group is also reportedly leaning towards such an extension, given weak demand in many developed economies struggling with a second wave of COVID-19 infections.
Japan’s fuel demand is under threat as cases in the country have skyrocketed in recent days.
Gasoline demand in Japan in November could be 2% lower compared to the same month last year, said Sugimori of PAJ, who chairs the country’s main refiner, Eneos Holdings. However, the recent spike in COVID-19 infections could trigger a much larger drop, of around 9%, in gasoline demand in December and January, Sugimori added.
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Japan, which did very well compared to other major economies in the first wave of coronavirus in the spring, is now seeing record daily COVID cases in the second wave. Japan has yet to restrict travel or business activities, but experts are concerned about the upcoming trend of winter holidays and holidays.
The peak of viral infections in Japan comes just as signs have started to appear that crude oil demand is strengthening in Asia, which remains the only positive point in the oil market as demand remains depressed in the main developed economies of Europe and in the United States.
By Michael Kern for OilUSD
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