Oil markets: OPEC+ shows intent to support with a token production cut

Oil markets: OPEC+ shows intent to support with a token production cut

The OPEC+ meeting on Monday was the focus of the market with the outcome expected to dictate near term market views.

The producer group decided to stick with a small production cut to the tune of 100,000 barrels per day to show intent that the producers were willing to cut further should there be a requirement to do so.

The OPEC+ Joint Technical Committee (JTC) projected the oil market to have a supply deficit of 300,000 barrels per day in 2023 after factoring in under production by some member countries.

The deficit is expected to widen to 1.8 million barrels per day in Q4 2023. The report also expected OECD commercial stocks to remain below the 5-year average for the rest of 2022 and 2023.

The October Official Selling Prices (OSPs) for Middle Eastern crude oil sales are expected to be announced this week but general market view has been that the prices of oil to Asia are likely to be kept lower. In August, the difference between the price of Dubai crude oil in the near term and in the forward months, a term called time spread, weakened.

A weaker time spread signifies an overall weakness in the market and is likely to be