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On May 3, OPEC representatives said that major countries led by Saudi Arabia and Russia agreed on Saturday to increase production by 411,000 barrels per day next month. This is the second consecutive month that the alliance has accelerated the pace of supply recovery after an unexpectedly large increase in production in May. The organizations leaders are trying to punish member countries that violate quotas and overproduce in a strategic shift. Market analysts believe that this move may indicate that a potential price war is brewing. According to OPEC+ representatives, Saudi Arabia has become fed up with the long-term overproduction of countries such as Kazakhstan and Iraq. Jorge Leon, an analyst at Rystad Energy who once worked in the OPEC Secretariat, said, "OPEC+ has just dropped a bombshell on the crude oil market. Saudi Arabias move is both to punish unruly members and to cater to Trumps desire to see lower oil prices."According to Sky News: It is expected that the opposition coalition will not win enough seats to form a majority government in the Australian election.On May 3, OPEC representatives said that OPEC+ members agreed to increase production by 411,000 barrels per day in June. The OPEC+ meeting originally scheduled for next Monday was brought forward to Saturday, but it is not clear why the meeting was rescheduled. Four sources previously leaked before the meeting that the increase in production in June is likely to be similar to the amount agreed in May (411,000 barrels per day). The market also mostly expects the organization to increase production significantly again, with an increase similar to that in May. Scott Shelton, energy expert at UnitedICAP, said: "The market is now completely focused on OPEC, and even the tariff war has taken a back seat." Oil traders are ready for OPEC+ to increase supply. Oil prices fell more than 1% on Friday, and fell 8% this week, the largest weekly drop since March.Market news: OPEC+ members agreed to increase production by 411,000 barrels per day in June.Musk: The recommendation algorithm of the X platform is being replaced with a lightweight version of Grok.

WTI sellers assault $87.00 as US President Biden contests OPEC+ ruling

Daniel Rogers

Oct 12, 2022 14:29

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WTI remains below the $87.00 support level as US President Biden expresses his displeasure with the decision by the Organization of the Petroleum Exporting Countries and its allies, including Russia, known collectively as OPEC+. Nevertheless, the bears remain cautious at the weekly low throughout the Asian session on Wednesday.

 

Reuters reported that US Vice President Joe Biden stated on Tuesday that "there will be consequences" for US-Saudi ties following OPEC+'s announcement last week that it will reduce oil production against US concerns. The news further reported that Biden's remark occurred a day after the influential Democratic senator Bob Menendez, chairman of the Senate Foreign Relations Committee, stated that the United States must immediately halt any cooperation with Saudi Arabia, including military sales. Notable is the fact that OPEC+ startled markets by declaring a two million-barrel-per-day output cut last week.

 

In addition to the OPEC+-agreed-upon supply cutbacks, the risk-aversion wave and the strengthening US Dollar Index (DXY) further weigh on commodities prices.

 

In spite of this, the DXY re-establishes a two-week high above 113.50 as higher US Treasury yields and hawkish Fed bets keep dollar investors optimistic ahead of today's Federal Open Market Committee (FOMC) Meeting Minutes.

 

The International Monetary Fund's (IMF) most recent economic forecasts may also impose downward pressure on the price of black gold. Tuesday, the IMF dropped its global economic growth forecast for 2023 from 2.9% in July to 2.7%, citing pressures from rising energy and food prices and interest rate hikes as the primary reasons for the change. Notable is that the Washington-based institute maintained its 3.2% growth prediction for 2022, compared to 6.0% for 2021.

 

In conclusion, the risk-averse sentiment and optimism for an easing of the supply constraint weigh on the price of black gold prior to the private weekly inventory data from the American Petroleum Institute (API), which was previously -1.77M.


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