Crude Oil Price Gaps Higher on OPEC+ Output Cut Compounding Supply Issues. Higher WTI?
Crude Oil, OPEC+, WTI, Brent, Russia, US, China, Kurdistan, Turkey – Talking Points
Did you hear the good news about crude oil? It went up by over 8% on Monday morning because of a surprise output cut from OPEC+. This awesome rally follows a 9% increase last week.
Good news – prices have declined a bit since they jumped initially. It’s possible that the market was a bit slow at the time, which made the initial jump worse. Some reports are saying that OPEC+ officials recently hinted that there won’t be any production cuts in the near future.
There’s been a cut of over 1 million barrels per day. Unfortunately, Turkey won’t be able to get oil from Kurdistan anymore due to an international court arbitration ruling.
The global markets might be getting 400k-450k fewer barrels per day from that source.
Great news! Russia has announced that they will continue to limit their oil production by 500k barrels per day until the end of this year.
The OPEC+ group, Saudi Arabia has taken on a big role by agreeing to lower their daily oil production by 500k barrels.
The syndicate might be considering the Fed rate hike cycle as a way to slow down economic activity in the world’s biggest economy.
The limited oil supply might actually lead to inflation, which could make the Fed rethink it is tightening policies.
The spokesperson for the National Security Council in the US said that they don’t think it’s a good idea to make cuts right now because of the uncertain market.
China’s move out of pandemic restrictions has not led to the boost in global economic activity that many had hoped for and may have also played a role in the decision.
The cartel made an unexpected announcement, and it happened a day before the OPEC+ monitoring committee meeting.
A quick update on the WTI and Brent futures contracts. In early trade, the WTI contract hit a peak of US$ 81.69 per barrel, while the Brent contract reached US$ 86.44. However, both contracts have since gone down from those highs.
Check out this chart for WTI crude oil, showing a really bold and assertive move
