The oil market is still playing a guessing game today as to what supply policy OPEC+ will set out at tomorrow’s meeting, but the $64 per barrel Brent price signals that traders expect a cautious approach from the alliance.

The OPEC+ alliance seems poised to give the oil market yet another dose of bullish medicine at tomorrow’s policy meeting, as the expectation is that it will not increase oil output from May onwards and instead wait for the oil demand recovery to gain speed again, which is why oil prices are up today.

There is a lot at stake as there are nearly 8 million barrels of oil per day, including the voluntary Saudi cuts, that are being put on ice and are waiting to return when OPEC+ allows.

The expectation that OPEC will be conservative in this meeting also comes from its recent communique, as the group downgraded its oil demand growth estimate for 2021 to 5.6 million bpd, down from its previous forecast of 5.9 million bpd. Rystad Energy currently forecasts 5.7 million bpd of oil demand growth for 2021.

The technical committee panel today said that the market is volatile and fragile, expressing concern about the oil demand recovery and road fuels, in particular, hinting at a low-consuming summer season.

While normally such bearish statements would cause prices to dive, today they work in a different way, as they are the reason the market believes OPEC+ will not raise output, which would be a bullish development that outpaces the bearish statements.

OPEC+ can decide what it wants, but there is a wild card that doesn’t depend on the alliance but only on Saudi Arabia. It’s the massive 1 million bpd voluntary cut that has kept the oil price buoyed since announced in January 2021.

Saudi is still hanging on to the promise, but these barrels have to return at some point and when that moment comes, prices will not be spared.

The Saudi policymakers of course know that if they drop the ball and allow a full flow of their curtailed barrels, prices will be hit severely, and that benefits no one.

Saudi Arabia is expected to pursue a gradual return of its voluntarily cut production, but we may not see it yet from May, as oil demand will still be under pressure.

Rystad Energy expects the oil demand recovery to speed up in the second part of the year and that’s when we believe OPEC+ will generously open the taps again.

For the moment, the market can only assume that tomorrow OPEC+ will act on the warnings from the technical committee today and not raise output, but the final call is for the ministers to make.

If Russia again asks to be allowed to raise output while others stay put, this could stir some colored reactions from OPEC members dutifully sticking to quotas and not getting production quota raises.

The cohesion of the OPEC alliance has proven itself over the past year, but that doesn’t change the underlying fragility and schisms that lie beneath the topline policy.

It is quite standard for oil prices to price in anticipation before an OPEC+ meeting, as the market does not want to miss out on the possibility of a coming bullish policy, as the alliance has made itself known for its conservative approach during the Covid-19 pandemic.

Despite that, any gains today are expected to stay marginal, with more serious price moves waiting for tomorrow’s OPEC+ meeting.