- Oil prices are trading higher, around $78.90, ahead of the OPEC+ meeting today
- The EIA reported a 1.6 MMBbl storage build yesterday, putting US inventories slightly above the five-year average
- OPEC+ agrees to preliminary 1 MMBbl/d output cut (Reuters)
- Two OPEC delegates have said that Saudi Arabia will extend its 1 MMBbl/d voluntary cut into July 2024, along with additional output cuts by other members
- Earlier, OPEC sources told Reuters that new cuts could take 1 to 2 MMBbl/d off the market in Q1 2024
- RBC Capital Markets said, "We could envision a scenario where Russia and Saudi Arabia roll over their cut through the first quarter of 2024 and assemble a coalition of the willing individual producers prepared to make voluntary adjustments,"
- Concerns over weak demand in 2024 continue, however, with the IEA forecasting demand growth to decelerate
- The actual cut may be closer to 500 MBbl/d as some OPEC countries are currently underproducing their quota
- Citi says a deeper OPEC cut could push oil prices higher by $5/Bbl (BBG)
- The bank said in a note that a further cut in output could lead to a “kneejerk price rally of $5/Bbl”
- Citi sees a 20% chance that OPEC cuts by 500 MBbl/d, although they view the most likely outcome as Saudi Arabia extending their voluntary cut while the other member countries commit to their existing quotas