OPEC Not Likely to Deepen Cuts: Citigroup

Saudi Arabia is likely to extend its 1mbpd oil output cut through 1Q 2024, and Russia is expected to do the same to its current 300kbpd cut of crude and oil products exports, while a deepening of cuts is not included in the base case, Citigroup said in a note, cited by Bloomberg.

• The extension of Saudi and Russian cuts should support the bank’s forecast for Brent at $80/bbl over the next three months, while the forecast faces upside risks from a 20% that OPEC+ cuts production by 500kbpd, the banks said.
• The additional cut would remove potential supply surpluses for 2024 and lift prices by $5/bbl.
• “Balances still look somewhat looser for 2024, likely resulting in price weakness during the late winter/early spring,” the note said.
• “The pace of the stock draws has already peaked, and 2024 balance could confront a surplus amid robust non-OPEC+ supply growth and slowing demand growth, with China apparent demand growth having already peaked,” the note said.