If you’re looking to make smart investments in the energy sector, you need to pay attention to the latest developments coming out of OPEC. This morning, oil prices are trading stronger after OPEC+ members decided to delay a supply increase by one month. This move has significant implications for the market and could impact your finances in a big way.
Members of OPEC+ were set to gradually unwind their additional voluntary supply cuts starting on December 1st, which would have led to a monthly supply increase of around 180k b/d for the next 12 months. However, the decision to delay this increase until January has caught many by surprise and could signal a shift in strategy for the group.
Reports have suggested that Saudi Arabia, the de facto leader of OPEC, was unhappy about giving away market share and was concerned about the lack of compliance by some members. This led to speculation that the group would move ahead with the planned supply increases despite recent weakness in prices. However, the delay indicates that OPEC+ may be more focused on supporting prices than previously thought.
Our analysis shows that the market is likely to remain in surplus through 2025 unless OPEC+ continues with cuts into next year. Preliminary production numbers for October show that OPEC’s output increased by 370k b/d, driven by the return of supply from Libya. Speculators have also been reducing their net long positions in ICE Brent, anticipating potential de-escalation in the region.
European gas prices faced pressure on Friday following reports of a potential deal between European buyers and Azerbaijan. The market has been concerned about the expiration of the Russia-Ukraine gas transit deal at the end of this year, which could impact gas supply to the EU.
Overall, these developments in the energy market have far-reaching implications for investors and consumers alike. It’s crucial to stay informed and monitor the situation closely to make informed decisions about your investments and finances.