Goldman Sachs Expects Deeper Cuts from OPEC
November 21, 2023
Our office will be closed Thursday November 23, and Friday November 24. There will be no forward contracting available on those days. The energy markets are totally closed on Thursday and only open for a brief time on Friday. Not sure when the OPEC+ news may hit the wires as they are meeting on Sunday, but any additional production cuts will see a run higher in prices, most likely on Sunday night when trading opens.
This is a short trading week and yesterday traders very likely squared up their books and got themselves covered and are working with limited staff today and I would expect trading to be light.
Any activity that takes place this week needs to be taken with a grain of salt as mentioned above less traders around and limited trades can move the market, so price action and market sentiment are suspect.
The US Department of Justice said Coffeyville Resources Refining & Marketing will pay more than $23 million to address Clean Air Act violations and offset environmental harm related to its Kanas refinery.
Goldman Sachs said, “Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in time spreads, and higher-than-expected inventories.” It said its baseline forecast is that the existing group production cuts stay fully in place in 2024. It expects that the unilateral Saudi cut of 1 million bpd will be extended through the second quarter of 2024 and reverse only gradually starting in July.
OPEC+ meets this weekend(November 26th) and the current outlook is that the current cuts will stay in place. There is some concern that additional cuts could be made as Saudi Arabia is wanting to keep prices supported. Russia is also trying to put its best foot forward prior to the meeting as Bloomberg reports they have cut their seaborne exports to the lowest since August.