CIO continues to advise investors with a high risk-tolerance to sell Brent’s downside price risks or to add exposure to longer-dated Brent oil contracts. (UBS)

With the current 2.2mbpd voluntary production cuts in place until the end of March, some market participants may wonder if that meeting will be a little late. We don't think so: As the production cuts are voluntary, they can be stopped outside of OPEC+ meetings. We expect those countries that joined in on the cuts to decide on whether to continue in early March. What has been already been made clear last year is that the reversal of those cuts will be gradual. We currently expect an extension into 2Q24.


Preliminary estimates saw OPEC January crude production down by 410,000 barrels per day (bpd) m/m in January. Also, US crude production likely fell by around 300,000bpd in January as a result of cold weather. Despite mild weather dominating in the Northern Hemisphere, we think the oil market was slightly undersupplied in January and still expect higher prices. Hence, we continue to advise investors with a high risk-tolerance to sell Brent’s downside price risks or to add exposure to longer-dated Brent oil contracts.


Main contributor – Giovanni Staunovo


Read the original report: Crude oil: OPEC+ reiterates readiness to take action, 1 February 2024.