OPEC+ extends cuts to 2026
December 6, 2024
OPEC+ has agreed to keep oil production at the current levels for the first quarter of 2025. OPEC agreed to extend the 2 million bpd and the 1.65 million bpd of cuts until the end of 2026 from the end of 2025. The gradual unwinding of 2.2 million of cuts will start from April 2025 and will last until September of 2026. The group also agreed to allow the United Arab Emirates to raise output by 300,000 bpd from April and until the end of September 2026, instead of the earlier plan to start it in January 2025.
The market’s reaction to the OPEC news was uneventful. These actions by OPEC did not ease the market’s concerns that there will be an oversupply in the coming months. There continues to be a lot of uncertainty around these markets, and currently, that has these energy markets stuck in rangebound trading. The new activities in Syria have added to the confusion and concerns in the Middle East. Traders will continue to watch this area for any changes that could impact energy production or supplies.
The EIA report showed a sharp rise in US gasoline implied demand and a much larger than expected rise in US refinery utilization capacity. This along with a large rise in total US net crude oil imports helps explains the larger than expected rise in US gasoline and distillate stocks.