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Oil’s Fate Hinges On OPEC+ Hanging Tough

May 28, 2024

Oil’s Fate Hinges On OPEC+ Hanging Tough

The global oil market is in OPEC+ walk-up mode.

That should keep prices supported this week ahead of the (now online) gaggle, which falls on June 2.

After that, price direction hinges on the immediate fallout from the meeting, plus bets about the market’s 2H trajectory.

Conventional wisdom points to an extension of the cartel’s current curbs, especially as weakening near-term timespreads suggest that physical conditions aren’t quite as tight as they have been of late.

Bloomberg’s Grant Smith, a well-seasoned OPEC+ watcher, leans that way, and that looks to be a sound call.

The existing reductions amount to ~2 million bpd, and the tap-tightening has contributed to a growing volume of unused capacity — a theme that may get an airing.

Crude’s sentiment this week will also be shaped by indications of just how strong Memorial Day weekend demand has proved to be in the US as the country embraces the start of the traditional driving season and takes to the roads (and skies).

Early signs have pointed to a solid showing, both on the highways and in the skyways.

Oil Can Push Higher As Cushing Stockpiles Collapse

September 26, 2023

Oil Can Push Higher As Cushing Stockpiles Collapse

Crude prices will likely get a fresh boost this week, as stockpiles at the key US storage hub in Cushing, Oklahoma, risk collapsing to the lowest level (aka “tank-bottoms”) in almost a decade.

Such a move would embolden those aiming for a return of $100 oil by year-end.

Cushing storage tanks

Cushing matters. Being the delivery point for the WTI futures contract, the rise and fall of the holdings is among the market’s most closely followed trends. So far in 3Q, inventories have slumped by ~47% to 22.9m barrels. That’s the lowest since July 2022 and that’s not far away from the 2014 lows.

If that comes to pass, it’d highlight the scramble for near-term supplies as the global market tightens up.

Estimates come on Tuesday, followed by the official print the next day.

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