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Some members of the OPEC+ group of oil-producing nations would need to slash output by an extra 2.31 million barrels per day (bpd) for a month to make up for their oversupply between May and July, an internal OPEC+ report seen by Reuters shows.
That oversupply above OPEC+ agreed targets ought to be compensated for in August and September, the report said.
OPEC+ sources said if additional cuts were spread over more than one month, the daily reduction would be smaller than 2.31 million barrels.
OPEC+ — which includes members of the Organization of the Petroleum Exporting Countries and other producers including Russia — stepped up their joint output cuts to a record 9.7 million bpd in May before tapering them to 7.7 million bpd this month.
In April the impact of the coronavirus pandemic on air and road travel and other areas of the global economy sent benchmark oil prices below $16 a barrel.
The continuing spread of the virus is now threatening oil demand recovery forecasts.
The OPEC+ report showed the monthly oversupply totals of May, June and July were added to produce the 2.31 million bpd total, which was not the average daily overproduction for the period.
“Real monthly overproduction over the period was much smaller,” one OPEC+ source said.
“In May it was about 1.3 million bpd, in June 0.5 million bpd and July 0.5 million bpd,” a second source said.
That adds up to a total of 70 million barrels, or enough to load 70 large Suezmax tankers.
The report shows OPEC+ expects oil demand in 2020 to fall by 9.1 million bpd, 100,000 bpd more than in its previous forecast, before rising by 7 million bpd in 2021.
However, it presents an alternative scenario in which a more-prolonged second wave of infections hits Europe, the US, India and China in the second half of the year.
Under this scenario, demand is forecast to fall by 11.2 million bpd in 2020, sending OECD commercial oil inventories in the fourth quarter to 233 million barrels above the latest 5-year average, the report showed.
Stocks would stand at 250 million barrels above the latest 5-year average in 2021.
Data shows that among OPEC members Iraq and Nigeria were the least compliant and even the UAE, which made additional voluntary cuts in June, overproduced by around 50,000 bpd over the May-July period.
Among non-OPEC participants, Russia and Kazakhstan overproduced by a cumulative 280,000 bpd and 190,000 bpd, respectively, over the three months.
