Power Up: OPEC+’s Rock and Hard Place
Power Up is published on Mondays and Thursdays. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here.
Sept 5 -By Clyde Russell
Asia Commodities and Energy Columnist
Welcome to Power Up! Crude oil prices have been hammered this week as investors focused on the threats to demand and hopes of a restoration of Libya’s output and exports. Brent futures hit a nine-month low on Wednesday, dropping to $72.35 a barrel and they are down 18% from the most recent peak in early July. The weakness is putting OPEC+ in a tight spot as the group considers whether it should proceed with its planned winding back of output cuts from next month.
OPEC+ Being Boxed In
The crude oil market may be pushing OPEC+ into a corner by hammering oil prices lower at a time the exporter group is mulling whether it should start winding back its output cuts from October. There are mixed signals coming from members of the group, which pulls together the Organization of the Petroleum Exporting Countries and allies including Russia. Some reports have said OPEC+ is now considering delaying its planned production increase of 180,000 barrels per day next month, in contrast to indications late last week that the output hikes would definitely go ahead.
The debate within OPEC+ is to be expected as the group has been consistent in saying it will monitor market developments and respond accordingly. The problem is that the market has not gone the way it was expected, with the forecast strong rise in demand, especially in Asia and led by the world’s biggest importer China, so far failing to materialise. Instead, crude oil investors have increasingly focused on the weak state of demand in Asia, and the not inconsiderable risks around economic growth in the United States and Europe. So much so that any bullish news, such as the loss of Libyan output, Houthi attacks on tankers in the Red Sea and a sharp drop in OPEC’s August output, has been ignored.
While OPEC+ members likely engage in a behind-the-scenes back and forth on what they should do in October, perhaps the views of banking giant Citi might be playing on their minds. Citi said in a client note on Wednesday that if OPEC+ doesn’t reduce output further, the average price of oil could drop to $60 per barrel in 2025 as demand declines and supply increases from non-OPEC producers. Citi said that while a technical rebound is possible, the market could lose confidence in OPEC+ defending the $70 a barrel level if the group doesn’t commit to extending current output cuts indefinitely.
Essential Reading
The United States has remained the largest exporter of liquefied natural gas so far in 2024, but a steep drop in selling prices and a sharp swing in export volumes to key markets is likely testing exporter appetite to stay on top.
A push by India to make more corn-based ethanol has turned Asia’s top corn exporter into a net importer for the first time in decades, squeezing local poultry producers and scrambling global supply chains.
The Chinese are going big on hydrogen in Spain. Chinese electrolyser manufacturer Hygreen Energy said it and its partners will invest more than 2 billion euros ($2.21 billion) in green hydrogen projects in the southern Spanish region of Andalusia.
Artificial intelligence could hurt oil prices over the next decade by boosting supply by potentially reducing costs via improved logistics and increasing the amount of profitably recoverable resources, according to Goldman Sachs.
Protests by truckers in Colombia, who are angry at an increase in diesel prices, have cut off the country’s biggest cities and are threatening fuel supplies, though the government insists the hike is fair.
We hope you're enjoying the Power Up newsletter. We'd love to hear your thoughts and feedback. You can reach us at powerup@thomsonreuters.com
Editing by Marguerita Choy
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
