Last week’s Opec+ agreement for deep Q1 voluntary cuts should be more than sufficient to prevent a buildup of global inventories in early 2024, yet prices have since weakened with Brent dropping below $75/B on 7 December. With the sum total of the cuts markedly more than the most bearish pre-meeting forecasts of Q1 stockbuilds, the tepid market response seemingly stems from doubts over compliance and concerns over the US economic outlook.
The buildup to the postponed 30 November ministerial meeting was dominated by discussion and rumors about how the producer alliance would adjust its strategy in the face of falling prices and the upcoming 1Q 2024 low-demand season. Market expectation leading into the meeting was that Saudi Arabia would extend its voluntary 1mn b/d production cut which was due to expire at the end of 2023, and that it would push for other producers to join in with new voluntary cuts. (CONTINUED - 1184 WORDS)
