OPEC+ oil output cuts could 'super tighten' the market if sustained, energy consultancy says
OPEC+'s production cut could lead to one of two scenarios in the second half of the year, according to Bob McNally of Rapidan Energy Group.
He stated that "In a positive scenario, the cuts help underpin prices and we witness a gradual recovery of oil demand as economies reopen. This allows OPEC+ start phasing in the cuts in the 4th quarter." "In a bad situation, the cuts do not support prices and we see a further decline in oil demand as countries remain under stress. This forces OPEC+ into deeper cuts." He said. He said that in a positive scenario, the cuts are able to support prices. There is a gradual recovery of oil demand once economies reopen. This allows OPEC+'s fourth quarter cuts to be phased out. He said that in a bad scenario the cuts do not support prices. "We see a further decline in oil demand due to economies remaining stressed, which forces OPEC+ into deeper cuts."