Crude Holding Gains With Expectation of OPEC+ Production Cut

Crude is holding steady after gaining 11% since Sep 26 on expectations of a cut to OPEC+ production targets at the group meeting today. The size of the potential cut expected has gradually increased from between 0.5 and 1mbpd suggested last week up to indications of as much as 2mbpd suggested yesterday.

• Brent DEC 22 up 0.1% at 91.89$/bbl
• WTI NOV 22 down 0% at 86.49$/bbl
• Gasoil OCT 22 up 0.7% at 1111$/mt
• WTI-Brent down -0.07$/bbl at -6.39$/bbl
• The OPEC cuts will be considered to try to stabilise the market amid growing concerns for global demand growth and to halt the recent price decline. The OPEC meeting in Vienna is the first in person meeting since Mar 2020 and will be followed by a press conference.
• Some analysts suggest that Saudi Arabia could also announce an extra voluntary cut in their oil production. Saudi Aramco yesterday warn that spare capacity is running low at only around 1.5% of total supply with the risk to supplies when China demand starts to recover.
  • Brent DEC 22-JAN 23 up 0.01$/bbl at 1.99$/bbl
  • Brent DEC 22-DEC 23 up 0.28$/bbl at 12.59$/bbl
• Concerns for future Russian supplies and the potential cut in OPEC+ production yesterday pushed the Brent Dec22-Dec23 spread up to the highest since Jul 4 at 12.73$/bbl. The real OPEC+ production cut is likely to be only 40-50% of the headline figure due to underproduction by many group members.
  • US 321 crack up 0.1$/bbl at 37.73$/bbl
  • US gasoline crack down -0.7$/bbl at 25.51$/bbl
  • US ULSD crack up 0.3$/bbl at 61.81$/bbl
• Gasoil spreads continue to surge on supply concerns with high refinery outages and lower imports from Russia ahead of the EU ban on seaborne Russia oil. Ongoing strike action at various French refineries is putting pressure on supplies.