Crude Oil Soars Over 2% as OPEC Mulls Deeper Cuts
By Adedapo Adesanya
Crude oil climbed more than 2 per cent on Monday as further supply cuts in the production of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are expected to be announced following a meeting of member countries early next week.
Brent crude futures expanded by $1.71 or 2.1 per cent to trade at $82.32 a barrel and the West Texas Intermediate (WTI) crude futures went up by $1.71 or 2.3 per cent to close at $77.60 per barrel.
According to Reuters, OPEC+ is set to consider whether to make additional oil supply cuts when the group meets later this month, after prices dropped by almost 20 per cent since late September.
Saudi Arabia, Russia, and other members of OPEC+ have already pledged total oil output cuts of 5.16 million barrels per day, or about 5 per cent of daily global demand, in a series of steps that started in late 2022.
The cuts include 3.66 million barrels per day by OPEC+ and additional voluntary cuts by Saudi Arabia and Russia.
The existing curbs might be not enough and the group will likely analyse if more could be implemented when it meets, with the possibility of deeper cuts on the table.
Ministers from OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, will meet on November 26.
The discussion is taking place after a four-week losing streak for oil as the war premium from the war between Israel and Hamas dissipated.
Goldman Sachs said that based on its statistical model of OPEC decisions, deeper cuts should not be ruled out given the fall in speculative positioning and in timespreads, and higher-than-expected inventories.
In a fresh note, ING expects Saudi Arabia and Russia to deepen their production cuts, adding “However, what is less clear is whether the broader OPEC+ group will make further cuts.”
If other OPEC+ members join the production cuts, the surplus in supply expected for the first quarter of next year may vanish, ING researchers said in the research.
The chances of other OPEC+ members joining in the cuts remain unclear for now but with oil prices slumping, the possibility of broader cuts is certainly on the table.