Blackmask blog: dangerous Markets:
The benchmark Brent crude, which had initially rallied on the news close to $85.00 a barrel, plunged into the $78 a barrel area, close to a $7.00 a barrel plunge in panic liquidation
Crude oil prices plunged Friday after the Organization of Petroleum Exporting Countries and their allies (OPEC+) voluntarily agreed on a fresh production cut of nearly 1 million barrel a day by early 2024. Bringing total cuts close to a whopping 3 milion barrels per day. The move failed to enthuse traders and, instead, drew scepticism on the group’s ability to achieve supply cuts target.
Hedge Funds remain unconvinced about the implementation of the supply cuts as the OPEC+ cartel, that consists of 80% of the world’s major oil-exporting nations, announced additional ‘voluntary cuts’ starting January 1 until the end of March 2024. The cuts were announced by each member country and not the group as a whole, (which is not that unusual) drawing uncertainty on the group’s ability to maintain the cuts.
OPEC officials said additional voluntary cuts, designed to take the total reduction above 2.2 million barrels a day (bpd) or about 2 percent of the world supply, would be announced by individual members in due course rather than the secretariat, Financial Times reported.
In spite of Hegde fund AI spin, global oil demand growth continues to remain strong defying challenges from high interest rates, stubborn inflation, slow economic growth and geo-political tensions. This growth is driven by demand normalization and China’s re-opening our binary trade.