- OPEC+ reached a consensus as the cartel's De-Facto leader, Saudi Arabia, in a surprise move announced it would reduce output further
- The decision to cut an additional 1 MMBbl/d was made unilaterally by Crown Prince Mohammad Bin Salman and showed the kingdoms willingness to be a team player and support the oil markets
- The deal will allow Kazakhstan and Russia to increase output by 750 MBbl/d
- AEGIS notes the price response was ecstatic as many assumed the cartel would increase output; WTI even eclipsed the major psychological level of $50/Bbl during intra-day trading
- The race for the majority in the U.S. Senate heats up; (D) Raphael Warnock wins the first U.S. senate seat
- A winner has not been called in the second runoff between (R) David Perdue and (D) Jon Ossoff, though Ossoff holds a narrow lead, according to an AP tally on Wednesday morning
- If the Democratic party wins both runoff races, then that would remove a potential hurdle to legislation for the incoming Biden administration
- Saudi cuts imply future demand concerns for oil (Goldman Investment Research — GIR)
- According to Goldman, the cuts were a surprise move for several reasons, including global demand beating expectations in December, the risk of encouraging the return of more U.S. shale production, and Saudi Arabia undermining its own efforts to have every OPEC+ member implement similar cuts
- AEGIS notes the move came as a shock as the kingdom has said that it would no longer pick up the slack for member countries. The compensatory cuts will allow Russia and Kazakhstan to increase output and have accurately been called a "new years gift" to the oil market by Russian Oil minister, Alexander Novak