OPEC+ Extends Voluntary Cuts Through 2024
March 4, 2024
OPEC+ agreed on Sunday to extend its voluntary production cuts of roughly 2 million bpd through the second quarter of 2024. Russia has pledge to focus more on constricting production than exports. Some suggest that these actions have put a floor under crude oil prices. Russia said they will cut their production and exports by 471,000 bpd in the second quarter. This additional Russian news was surprising to the market but for the most part these cuts appear to have been baked into prices as in early trading the market tested lower.
OPEC meets again in June, and it will likely have to consider keeping cuts in place at that meeting through the end of the year to prevent the global markets from going into a surplus. As time goes on it is very likely that some of the members will start to grumble about their quotas so the next meeting in June may be a bit more contentious.
Baker Hughes reported Friday that 3 crude oil rigs came online this week in the US up to a total of 506 rigs. Last year at this time the US had 592 oil rigs in operation. Another 2 frac crews hit the oil patch last week, putting the total count at 272 and only 4 shy of last year’s levels.
Front month WTI crude did test and trade through $80 on Friday. This opens the potential for a test of the $85 dollar level.