Crude oil: OPEC+ independent production reduction plan gradually reduced
2024-06-13
■ The OPEC+ production reduction and extension decision will positively and negatively impact the market.
■ The supply and demand of crude oil are in a seasonal tense phase, and WTI is expected to receive support.
The Organization of the Petroleum Exporting Countries (OPEC) and its non-member countries, OPEC+, held a ministerial meeting on the 2nd. They have decided to extend the deadline for self-production reduction from the end of June to the end of September and gradually reduce the scale until the end of September 2025. Considering that some oil-producing countries have already shown a negative attitude towards autonomous production reduction measures, this is seen as a concern. The decision to gradually reduce the scale of independent production reduction after October is unexpected for the market. As a result, the market began to believe that the global crude oil supply and demand would be surplus, and the crude oil futures prices of WTI were under downward pressure. However, future market conditions may lead to the cessation or expansion of independent production reduction, leaving room for regulating crude oil supply and demand, thereby curbing the decline of WTI to a certain extent.
Furthermore, the market was taken by surprise when OPEC+ decided to make certain adjustments to the coordinated production reduction originally scheduled for the end of 2024 and extend it until the end of 2025. This unexpected move was seen as a signal of OPEC+'s intention to tighten global crude oil supply and demand, potentially leading to an upward trend for WTI.
In the United States, we have entered the summer driving season after the Memorial Day holiday on May 27th. This is expected to lead to an increase in gasoline demand, with the period from Independence Day on July 4th to August being the peak of demand. Additionally, the potential impact of weather factors such as hurricanes on the production capacity of refining facilities in the Gulf of Mexico and other regions is a cause for concern. These factors could push crude oil's future supply and demand into a seasonal tense phase. It is anticipated that WTI will maintain a stable level above $70 per barrel.
■ The supply and demand of crude oil are in a seasonal tense phase, and WTI is expected to receive support.
The Organization of the Petroleum Exporting Countries (OPEC) and its non-member countries, OPEC+, held a ministerial meeting on the 2nd. They have decided to extend the deadline for self-production reduction from the end of June to the end of September and gradually reduce the scale until the end of September 2025. Considering that some oil-producing countries have already shown a negative attitude towards autonomous production reduction measures, this is seen as a concern. The decision to gradually reduce the scale of independent production reduction after October is unexpected for the market. As a result, the market began to believe that the global crude oil supply and demand would be surplus, and the crude oil futures prices of WTI were under downward pressure. However, future market conditions may lead to the cessation or expansion of independent production reduction, leaving room for regulating crude oil supply and demand, thereby curbing the decline of WTI to a certain extent.
Furthermore, the market was taken by surprise when OPEC+ decided to make certain adjustments to the coordinated production reduction originally scheduled for the end of 2024 and extend it until the end of 2025. This unexpected move was seen as a signal of OPEC+'s intention to tighten global crude oil supply and demand, potentially leading to an upward trend for WTI.
In the United States, we have entered the summer driving season after the Memorial Day holiday on May 27th. This is expected to lead to an increase in gasoline demand, with the period from Independence Day on July 4th to August being the peak of demand. Additionally, the potential impact of weather factors such as hurricanes on the production capacity of refining facilities in the Gulf of Mexico and other regions is a cause for concern. These factors could push crude oil's future supply and demand into a seasonal tense phase. It is anticipated that WTI will maintain a stable level above $70 per barrel.