J.P. Morgan sees Saudi Arabia offering deeper oil cuts

FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic

LONDON (Reuters) - A worsening global oil demand outlook will prompt OPEC to reverse a planned easing of oil cuts in 2021 with Saudi Arabia offering deeper cuts below its current quota, J.P. Morgan said in a research note.

“Against relatively bearish investor sentiment on the near-term demand outlook as COVID-19 potentially accelerates infections into winter, we highlight the potential for Saudi to drive incremental cuts at the Nov. 30 OPEC meeting,” analysts including Christyan Malek said in a note.

“Our base case is a reversal of the 1.9 million barrels per day output increase slated for 2021 with an upside scenario of a deeper cut whereby Saudi reduces its own quotas even lower (in the event of a worsening demand outlook),” J.P. Morgan said.

Reporting by Dmitry Zhdannikov; editing by Jason Neely