OPEC Plus Extends Production Cuts, Fueling Rising Prices and Supply Concerns
Recent reports suggest that OPEC-plus is set to extend its production cuts until the end of the first quarter of next year, leading to a trend of dwindling supply. This move could potentially establish a lower trading range for the oil market for the remainder of this year and into the new year.
Meanwhile, tensions between China and the US have escalated as China retaliated against export controls imposed by the Biden administration. China has banned the export of gallium and germanium, crucial metals used in semiconductor production and other high-tech products.
In other news, Iraq halted operations at the Shuaiba refinery in Basra due to overloading of fuel oil storage tanks, causing disruptions in fuel oil exports. Additionally, an energy crisis is brewing in Europe due to increased storage withdrawals and cold weather conditions affecting gas-fired electricity generation.
On the US front, a cold snap has impacted natural gas supplies, while ethanol production has hit an all-time high, leading to an oversupply in the market. As we head into winter, the fundamental outlook for oil remains solid, with potential challenges ahead to test the market’s oversupply thesis.