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OPEC+ Cuts Drive Market Deficit of 2.3mbpd: Goldman

OIL

OPEC+ production cuts have resulted in a large deficit of 2.3mbpd in Q3 according to Goldman Sachs. Three rounds of cuts by OPEC+, including a voluntary reduction by Saudi Arabia since Sep 2022 fully explain the market’s return to a deficit.

  • The return to deficit largely explains the summer rally in timespreads and oil prices as a potentially more aggressive OPEC+ price target is the key moderately bullish risk to the 12-month ahead Brent forecast of $93/bbl.
  • They no longer expect a partial unwind of the voluntary 1mbpd Saudi production cuts with production expected to remain flat at 9mbpd in October.
  • History suggests that the producer group is not in a rush to boost production with commercial stocks/timespreads only moderately below/above their historical averages.
Energy BulletsCommodities
Energy BulletsCommodities

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