Catch up – OPEC does not have “the bandwidth to prop prices much higher”

December 26, 2024 at 10:16PM
CNBC carried an interview with oil market analyst Vandana Hari, founder of Vanda Insights. Video is here.

In summary:

Limited Influence of U.S. Leadership:

Despite former President Trump’s pro-drilling rhetoric, U.S. oil producers prioritize technological advancements over expanding drilling activities.

U.S. Production Trends:

U.S. oil production grew by approximately 300,000 barrels per day in 2024, a significant slowdown from the nearly 1 million barrels per day increase the previous year.

Modest growth is expected to continue into 2025, driven by price sensitivity, with production likely to remain steady if WTI crude stays above $65–$70 per barrel.

Global Production Growth:

Increased oil output is expected from Canada, Brazil, Argentina, Guyana, and Norway, with more consistent and predictable production trends.

OPEC+ Strategy:

OPEC+ has delayed easing 2.2 million barrels per day of production cuts, showcasing a united and patient strategy for gradual supply increases.

The group aims to maintain Brent crude prices above $70 per barrel, which is likely the maximum price support they can offer without overextending its influence.

“I think that is where the market attention is focused because that’s the variable. With OPEC+, we’ve seen three postponements of the unwinding of the 2.2 million barrels per day. What that tells me is that OPEC+ despite all the talks in the market speculation is managing to remain cohesive”

This article was written by Eamonn Sheridan at www.forexlive.com.