Oil Prices Rise as OPEC+ Considers Deeper Supply Cuts 🛢️

Oil futures continued their upward trajectory on Monday, with Brent crude futures gaining 0.7% to reach $81.18 a barrel, and U.S. West Texas Intermediate crude rising to $76.40 a barrel, up 0.7%. The extension of these gains is attributed to expectations that OPEC+ may implement additional supply cuts during its meeting on November 26 to stabilize prices, which have faced a decline over the past four weeks. Both Brent and WTI contracts saw a 4% increase on Friday following reports from three OPEC+ sources indicating a potential consideration of deeper supply cuts. The current oil market dynamics, with prices dropping nearly 20% since late September and inter-month spreads moving into contango last week, signal ample supply. Analysts from Goldman Sachs suggest that deeper cuts are plausible, considering the fall in speculative positioning, timespreads, and higher-than-expected inventories. The bank’s baseline forecast anticipates the continuation of existing production cuts through 2024, with Saudi Arabia’s unilateral cut likely to extend into the second quarter of next year, gradually reversing from July onwards.