Global oil markets won’t be able to absorb planned production increases by OPEC+ members as demand remains weaker than expected, said the head of commodities trader Mercuria Energy Group.Oil stockpiles have been building in September and won’t draw down enough in the remainder of the year to be in balance if the cartel follows through with its plan to taper production cuts early next year, Marco Dunand, Mercuria’s co-founder and chief executive, said in an interview.
“We see a fair amount of oil going into ships, into floating storage, now,” he said. “We are filling up both tankers as floating storage and onshore tanks in September,” he said. “There has been a slowdown in the global rebalancing process.”
Global oil inventories built at an unprecedented rate between March and May due to the combination of the pandemic’s impact on energy demand and the price war between Saudi Arabia and Russia, which saw the kingdom flood the market with crude. Since then, inventories have been drawing down after U.S. President Donald Trump brokered a deal between Riyadh and Moscow to cut output from May.