Quiver Quantitative - The shifting sands of OPEC+ dynamics have market analysts on their toes as the influential group wrestles with internal disputes and external market pressures. Initially, a consensus had formed around an extension of the current output curbs led by Saudi Arabia and Russia, but the unexpected delay of the OPEC+ meeting has sparked speculation of potential measures to further tighten oil markets. A Bloomberg survey reflects this changing sentiment, with approximately half of the respondents now anticipating additional curbs to be announced at the rescheduled gathering on November 30, signaling a proactive stance in response to recent crude price drops and looming supply surpluses.
Despite the postponement triggered by African members' resistance to reduced output quotas, there is a growing anticipation that the coalition will reach an accord. The overarching goal remains to bolster oil prices that have seen a substantial decline, risking further weakening as 2024 approaches with its predicted surplus. Industry experts from RBC Capital Markets (TSX:RY), JPMorgan (NYSE:JPM) and noted hedge fund manager Pierre Andurand consider further collective action a possibility, though Commerzbank (ETR:CBKG) analyst Carsten Fritsch warns of potential short-term price dips if Saudi Arabia limits its response to an extension of its voluntary cuts.
The market's reaction to the unfolding drama at OPEC+ has been one of cautious skepticism, evidenced by the initial surge in Brent futures on rumors of a collective cutback, followed by a cooling off amid doubts of the group's unity. The decision to convert the ministerial meeting to a virtual format, away from the traditional in-person Vienna assembly, may signal the complexities of reaching a unanimous decision. Still, the consensus among OPEC watchers is a belief in the group's eventual intervention, aimed at deterring oil bears and reasserting control over the market narrative.
As OPEC+ grapples with these challenges, the outcome of the November 30 meeting remains critical, not only for the immediate trajectory of oil prices but also for the stability and credibility of the alliance. The energy market is bracing for an OPEC+ strategy that could redefine supply dynamics as the group attempts to navigate a murky economic environment and internal discord.
This article was originally published on Quiver Quantitative