OPEC+ maintained its oil output policy at a meeting on Feb. 3, a sign producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the pandemic lingers.

A Joint Ministerial Monitoring Committee of OPEC and allies, known as OPEC+, is “optimistic for [a] year of recovery in 2021,” OPEC said in a statement after the panel met virtually.

Oil has rallied from historic lows hit last year, thanks to record OPEC+ output cuts that the group is starting to unwind.

Global benchmark Brent extended gains after the meeting and rose towards $59/bbl, its highest since late February 2020.

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“While inventories are drawing fast, the market is pricing in a smooth rollout of vaccines and that may be premature,” said Amrita Sen, co-founder of Energy Aspects.

The OPEC+ panel made no mention of changing policy, which calls for most members to hold supply steady in February and top exporter Saudi Arabia to cut output voluntarily by 1 million bbl/d this month and next.

“While economic prospects and oil demand would remain uncertain in the coming months, the gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand,” OPEC's statement said.

A document seen by Reuters on Feb. 2 showed OPEC expects the output cuts will keep the market in deficit throughout 2021, even though the group cut its demand forecast.

The OPEC+ panel meets next on March 3, which is expected to be followed by a full OPEC+ gathering to decide policy.

Rystad Energy said it expects crude supply deficits throughout the summer and OPEC+’s next move may be to pump more.

“Today’s OPEC+ meeting could be paving the way for a gradual production ramp up from April onwards,” said Rystad’s head of oil markets, Bjornar Tonhaugen.

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