The tally on the brand new OPEC+ reduce is 684,000 barrels per day

The tally is in for the OPEC+ set of voluntary cuts introduced right this moment. For those who put aside the Russian and Saudi Arabian reduce extensions, the overall is 684K barrels per day.

That is not as a lot as some had been hoping for nevertheless it’s certainly greater than was anticipated a couple of weeks in the past, earlier than the worth of oil started to sink. The oil market initially took a dim view of the cuts nevertheless it’s rebounded with WTI crude now up t o $76.81 from $75.05 on the lows. That is nonetheless down about $1 on the day however brent is flat.

The main focus now shifts to the demand facet, the place the numbers had been disappointing in Q3 and to date in This fall. China is at all times powerful to determine however imports have slowed since September. Seasonally this time of 12 months can be messy due to refinery turnarounds and the tip of driving season. The hurricane season was additionally a dud.

The day is not over but however you may see the uncertainty within the crude market in right this moment’s candle.

I believe this finally resolves greater however the ceiling is definitely decrease given the 5 million barrels per day of spare OPEC capability on the market. I wrestle to see $100 and $90 would possibly even be powerful.

The large query is how far more the US will produce subsequent 12 months. The EIA reported right this moment that September US manufacturing was 13.24 million bpd. The rig rely has been dropping and that ought to begin to hit within the new 12 months however whether or not or not that occurs could be the subsequent huge oil market catalyst as a result of many merchants will not consider it till they see it.

One other potential tailwind for oil can be if the underside falls out of pure gasoline costs, which is definitely doable given heat temperature forecasts and over-production. That might result in shut-ins at gassy wells.