Oil price

Original title: OPEC+ teamed up with the United States to sing, oil prices may return to $100 in winter

[ 截至9月30日的一周，全美战略原油储备环比下降140万桶至4.292亿桶，为上世纪80年代以来最低水平。 ]

As OPEC+ further tightened supply, international oil prices rebounded sharply last week, with Brent crude oil prices approaching the $95 mark again for the first time in three weeks. But the new round of production cuts has annoyed the United States, saying OPEC+ had made a short-sighted decision.

Tamas Varga, senior market analyst at crude oil broker PVM Oil Associates, said in an interview with a reporter from China Business News that concerns about stagnant economic growth or even recession have become the incentive for the recent weakness in oil prices. OPEC+ once again expressed its determination to support the market, and it can be seen that the decision to cut production is quickly reflected in prices. Since the second half of the year, the volatility of the futures market reflects that the disturbance on the demand side outweighs the impact on the supply side, but the fourth quarter may see a reversal of this trend.

The actual scale of production reduction

or about 1 million barrels per day

International oil prices plunged more than 20% in the third quarter, the worst performance in nearly two years, as investors worried about the poor outlook for demand. With crude oil prices completely reversing all of the gains since the escalation of the situation in Ukraine, OPEC+ production cuts are expected to gradually become stronger. A week before the ministerial meeting, it was reported that Russia was considering proposing to cut production by 1 million barrels per day, and on the eve of the meeting, the plan to limit production was further increased to 2 million barrels per day.

Varga told reporters that the surge in interest rate hikes triggered by inflation has slowed down manufacturing activity in various regions recently. The manufacturing PMI in the euro area fell to a 27-month low, and the manufacturing PMI in the United States was the lowest since May 2020. , a clear sign that the impact of rising interest rates on consumer demand is slowing. The shock to the economy from monetary policy is expected to continue for the foreseeable future.

To ease oil price risks, OPEC+ ministers agreed last week to cut output by 2 million barrels per day from November, the biggest drop since the pandemic in 2020. At the same time, the producers agreed to adjust the monthly meeting frequency of the Joint Ministerial Monitoring Committee (JMMC) to every two months and retain its power to convene additional meetings on an ad hoc basis to respond to changes in the energy market in a timely manner.

The two major producers, representing the alliance of oil-producing countries, reaffirmed their determination to manage the market in solidarity. Saudi Energy Minister Abdulaziz bin Salman said the production cuts were in response to a wave of interest rate hikes and a weakening global economy. Russian Deputy Prime Minister Alexander Novak said that OPEC+ agreed to strengthen the cooperation agreement until the end of 2023.

Some analysts pointed out that considering that the output of some member countries has fallen below their quota targets, the actual scale of production reduction may be reduced. Tortoise portfolio manager Rob Thummel found that OPEC+ is currently producing 3.6 million barrels per day below its existing quota, of which OPEC itself produces less than 1.2 million barrels per day, and oil-producing countries led by Russia Production was less than 2.4 million barrels. In view of this, the initial size of the actual production cut is about 1 million barrels per day.

Varga told reporters that while OPEC has positioned itself to ensure an appropriate pricing environment for both consumers and producers, the decision to reduce output in the current environment is likely to further squeeze tight supplies, especially Considering that the winter consumption boom is coming. He believes the production cuts are very well targeted and that OPEC+ is prioritizing prices over supply stability at a time of uncertainty in the oil market.

JPMorgan Chase expects the Biden administration to retaliate by releasing more inventories from the strategic oil reserve, but since March this year, the largest ever dumping of oil reserves in history, the U.S. strategic oil reserve has fallen to its lowest level in nearly 40 years. Therefore, it is difficult for the United States to continue to release strategic inventories on a large scale for a long time to stabilize oil prices.

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