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Tag: production cuts

  • Standard Chartered Bucks Bearish Trend, Forecasts Oil Price Gains in 2026

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    We are in the final innings of the third quarter, and energy markets remain tepid amid bearish sentiment. Brent crude for November delivery was trading at $69.45 per barrel at 8.45 am ET on Friday, more than $10/bbl below the current year’s peak at ~81/bbl, while WTI crude was changing hands at $65.05 per barrel compared to the January peak of $78.71 per barrel. Oil prices have mostly traded ~15/bbl lower in 2025 compared to the previous year, primarily due to oversupply fears due to OPEC+ accelerating the unwinding of production cuts, coupled with sluggish global economic growth and heightened trade tensions that suppressed oil demand, leading to ample global supply outweighing demand. Increased output from non-OPEC+ countries also contributed to a build-up of oil inventories. Lately, Wall Street has been warning that oil markets could soon face a surplus, putting more pressure on already depressed oil prices. To wit, Goldman Sachs has predicted that oil markets could be oversupplied by 1.9 million b/d in 2026 amid OPEC+ unwinding production cuts and production in the Americas rising. Wall Street now sees oil prices sinking to the $50s per barrel next year, further compounding this year’s decline.

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    In sharp contrast, commodity analysts at Standard Chartered have predicted that oil prices will move higher in the coming year driven by robust demand and a raft of economic stimulus measures.

    StanChart notes that U.S. supply has hit an all-time high in the current year, but is predicting that producers will be forced to cut output due to prevailing low oil prices. On the demand side, expectations of weaker global demand in the final quarter of the year, driven by trade wars and tariffs, are likely to trigger a raft of economic stimulus in the form of rate cuts in the United States and potential for China to respond with a package of measures. Further, Ukraine’s targeted attacks on Russian energy infrastructure have forced Russia to cut refinery runs and ramp up crude exports. According to StanChart, vessel-tracking data suggests that Russia’s seaborne crude exports jumped to a 16-month high at 3.62 million barrels per day (mb/d) in August. The analysts note that Ukrainian attacks have also focused on both pipeline pumping stations and export terminals, which would pressure crude loadings further if they become significant enough to halt flows for extended periods. Meanwhile, an escalation in the unfolding tensions between Europe and Russia is likely to increase the risk premium for crude oil and natural gas.

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  • Saudi Arabia could 'flush' the oil market with a flood of supply to regain control over prices in the face of rising US production, crude expert says

    Saudi Arabia could 'flush' the oil market with a flood of supply to regain control over prices in the face of rising US production, crude expert says

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    Photo by Christian Ender/Getty Images

    • Saudi Arabia may “flush” the market with a flood of supply that would sink prices, an expert said.

    • That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments.

    • Meanwhile, US crude output has been on a tear this year, hitting new record highs.

    Saudi Arabia may flood the market with more oil supplies, reversing its production curbs, as the world’s top crude exporter tries to regain control of prices, an energy market veteran said.

    That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments, prompting oil prices to fall.

    “We’ve more or less been saying potentially Saudi needs to just flush this thing out,” Paul Sankey from Sankey Research told CNBC on Friday.

    He estimated that Saudi Arabia has capacity to ramp up its output by an additional 2.5 million barrels a day.

    For now, OPEC’s de factor leader is trying to prop up crude by pumping less. On Thursday, it extended its cut of 1 million barrel per day into the first quarter.

    But Sankey noted Saudi Arabia shocked markets in 2014, when it similarly tried to flush the market by sinking crude prices from highs of around $110 a barrel to $50.

    The drop in prices eventually forced higher-cost producers to exit the market as pumping was no longer profitable. Meanwhile, Saudi Arabia continued to pump as it was better able to withstand lower prices. As supplies from its rivals disappeared, the kingdom was able to regain traction over prices.

    Back then, like today, booming US oil supply is a headache for OPEC and Saudi Arabia. And Sankey said Friday that the oil cartel has “a huge problem with US production levels.”

    In fact, US crude output has been on a tear this year, with monthly production hitting a record high in September at more than 13.2 million barrels a day, according to data from the Energy Information Administration.

    Read the original article on Business Insider

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  • Oil extends gains as OPEC+ to mull deeper cuts

    Oil extends gains as OPEC+ to mull deeper cuts

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    By Florence Tan

    SINGAPORE (Reuters) – Oil futures nudged higher on Monday, extending gains on expectations of OPEC+ deepening supply cuts to shore up prices, which have fallen for four weeks on easing concern of Mid-East supply disruption brought about by the Israel-Hamas conflict.

    Brent crude futures climbed 11 cents, or 0.1%, to $80.72 a barrel by 0012 GMT while U.S. West Texas Intermediate crude was at $75.97 a barrel, up 8 cents. The front-month December contract expires later on Monday while the more active January futures gained 13 cents, or 0.2%, at $76.17 a barrel.

    Both contracts settled 4% higher on Friday after three OPEC+ sources told Reuters that the producer group, made up of the Organization of the Petroleum Exporting Countries and their allies including Russia, is set to consider whether to make additional oil supply cuts when it meets on Nov. 26.

    Oil prices have dropped by almost 20% since late September while prompt inter-month spreads for Brent and WTI slipped into contango last week. Prompt prices are lower than those in future months in a contango market, signalling sufficient supply.

    “Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in timespreads, and higher-than-expected inventories,” Goldman Sachs analysts said in a note.

    The bank’s baseline forecast is that the existing group production cuts stay fully in place in 2024, and that the unilateral cut of 1 million barrels per day by Saudi Arabia will be extended through the second quarter of next year, and reversed only gradually from July.

    IG analyst Tony Sycamore said WTI prices may rise toward $80 a barrel on the back of the possibility that OPEC+ does announce deeper cuts at their upcoming meeting although a drop below $72 will encourage the Biden administration to refill the U.S. Strategic Petroleum Reserve.

    “All of which suggest that a rebound in prices is likely in the first half of this week,” he added.

    Investors are also eyeing disruption in Russian crude oil trade after Washington imposed sanctions on three ships that have sent Sokol crude to India.

    On Friday, Moscow lifted a ban on gasoline exports which could add to global supplies of the motor fuel. This comes after Russia scrapped most restrictions on exports of diesel last month.

    In the Middle East, U.S. and Israeli officials said a deal to free some of the hostages held in the besieged Gaza enclave was edging closer despite fierce fighting.

    (Reporting by Florence Tan; Editing by Christopher Cushing)

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