OPEC Likely to Cut Output As Higher Production Would Reward Speculators: Commerzbank

Markets are expecting Saudi Arabia and the other OPEC+ members to extend their current oil production cuts until early next year, from currently end-2023, as speculators have caused the recent fall in oil prices and higher production would reward speculators, Commerzbank said in a note, cited by Bloomberg.

• The marked fall in oil prices in recent weeks and the flattening of the crude oil forward curves raised doubts that the oil market will be undersupplied at the start of next year, as OPEC predicted in its recent monthly report, the bank noted.
• The IEA’s monthly report expected a slight oversupply in 1Q24 even if Saudi Arabia sticks with its output cuts.
• The market would be at risk to be oversupplies and in consequence prices would fall, if Saudi Arabia would increase oil production, the bank said.
• Three unnamed OPEC+ sources told Reuters previously that additional cuts could be considered at the next meeting. Because expectations of further cuts have been raised, an extension of Saudi and Russian cuts into 2024 without deepening cuts could trigger a renewed oil price slide, the bank added.