33 C
Dubai
Saturday, July 13, 2024
spot_img

Is OPEC+ Poised for Additional Production Cuts to Support Prices?

Uncertainty and Analyst Predictions: As the OPEC+ ministerial meeting on November 30 draws near, the global crude market faces crucial decisions. Analysts anticipate potential further price declines if the producers’ group does not implement additional production cuts to counteract rising US supply and weakening demand.

Market Reaction to Meeting Delay

Price Declines and Traders’ Caution: Oil prices plummeted over 4.0% last week after OPEC+ announced a delay in the meeting originally set for November 26. Traders awaited the rescheduled meeting’s outcome, with benchmark US crude dropping to $75.54 per barrel, down $1.56, and Brent crude falling 84 cents to $80.23 per barrel.

Factors Behind Postponement

Disagreements and Sharp Price Decline: The unexpected meeting postponement, attributed to challenges in reaching a consensus on production levels, initially led to a sharp decline in Brent and WTI prices. Reports indicated disagreement on current production levels and potential associated cuts among OPEC+ members.

Challenges and Recommendations

Hedge Fund Manager’s Insights: Hedge fund manager Pierre Andurand suggested that the OPEC+ group might need deeper cuts to offset higher-than-expected supply from the US and other non-OPEC+ producers. US oil production has surpassed expectations by 700,000 to 800,000 barrels per day in 2023.

Goldman Sachs’ Outlook: Goldman Sachs raised the possibility of a deeper output cut during the November 30 meeting. The bank anticipates an extension of additional voluntary cuts by Saudi Arabia and Russia through at least the first quarter of 2024.

Market Trends and Previous Declines

Four-Week Price Decline: Brent and WTI prices have seen a four-week decline due to record US crude oil production and concerns about diminishing global demand, particularly in China. Brent is down 18% since late September, and WTI has entered a bear market with a 20% decline since its peak that month.

Analyzing Previous OPEC+ Decisions

Surplus Elimination Potential: Despite previous OPEC+ decisions to cut total output and additional voluntary cuts by Saudi Arabia and Russia, analysts suggest a deeper OPEC+ group cut, combined with extending voluntary reductions, could eliminate the expected market surplus in the first quarter of 2024.

IEA’s Caution and Recent Forecasts

Transforming Deficit to Surplus: Toril Bosoni, Head of the Oil Industry and Markets Division at the International Energy Agency, cautioned that the current oil market deficit might transform into a slight surplus in 2024, even if Saudi Arabia and Russia extend their cuts. The IEA recently raised global oil demand forecasts for 2023 and 2024 but warned of supply growth exceeding expectations, emphasizing potential market volatility ahead.

Also Read

Impact of Dubai Metro Blue Line on Property Prices and Rentals: Anticipated Rise along the Route

Embracing Fitness in a 9-5 Life: Dubai Fitness Challenge Guide

Related Articles

Axi and Manchester City Women’s Team Kick Off big ‘The Mentality Edge’ Campaign 1

Axi and Manchester City Women’s Team Kick Off 'The Mentality Edge' Campaign In a dynamic culmination to the 2023/24 football season, leading online FX and...

Garuda Advertising Launches Teleforce: A Telecom, Marketing, and Sales CRM Platform

Garuda Advertising announces the launch of Teleforce, a Telecom, Marketing, and Sales CRM designed to empower businesses with a comprehensive Communication Platform as a...

Chinese and Indian Stocks Favored Over Japan in Second Half of the Year

Chinese and India, as the world’s two most populous countries, present vast opportunities for growth and investment. In the second half of the year, investors...

NAZ INDUSTRIES Earns 2024 Great Place To Work Certification™

NAZ INDUSTRIES Earns 2024 Great Place To Work Certification™ Dubai, United Arab Emirates — NAZ INDUSTRIES is proud to be Certified™ by Great Place To...

Ajman Department of Finance Engages Globally at 30th Annual Reserve Management Seminar

Ajman Department of Finance Participates in the 30th Annual Reserve Management Seminar Ajman, 4 July 2024: The Ajman Department of Finance, represented by Jassim Bu...

Latest Articles