On Monday October 19 the OPEC+ JMMC meeting did not present any surprises to the oil market. There was no recommendation to change the previously approved policy for 2021 reducing the group’s collective output cuts to 7.7mln bpd from 9.7mln bpd.

However, both Russia and Saudi Arabia highlighted the uncertain demand outlook given COVID-19’s resurgence. It is worth having a quick look at that in more detail as demand issues could drag on oil prices into November.

1). More people are working from home. There are fewer business trips, less frequent commutes, and this could become a ‘new normal. In Singapore nearly 50% of people are working from home. Look at the drop in mobility on the table below:

2) Travel is way down. Flightradar 24, providing real time online flight tracking service, sees a potential 3.5mln bpd decline in jet fuel consumption. This is due to a 48% drop in global commercial flights.

Jet fuel and gasoline inventory at major ports such as Amsterdam have soared to multi-year higher.

Global road traffic is way down with Sa Francisco road travel down around 70%.

So, although OPEC expects global demand to exceed pre-pandemic levels in 2022 that could be overly optimistic. Furthermore, the widespread adoption of electric vehicles is almost a foregone conclusion now which will in the longer term weigh on oil demand too.

The next JMMC meeting is November 17 and OPEC/OPEC+ meeting is November 30/December 01. It will be interesting to see how they respond to the mounting pressures that Saudi and Russia alluded to in their last meeting. Talk of production cuts will support oil prices.