Both WTI and Brent jumped again on Friday as Saudi Arabia and Russia continued to call for more OPEC+ countries to curb their production in 2024.
Despite OPEC+ also coming to a consensus on fossil fuel production cuts, Saudi Arabia and Russia are also implementing their own domestic production cuts.
Saudi Arabia in particular has confirmed its commitment to maintaining an extra voluntary reduction of 1 million barrels per day (bpd).
This will result in a predicted production level of approximately 9 million bpd for December, according to the statement from the Ministry of Energy.
“This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” a source told Reuters on Wednesday.
At the time of writing on Friday, WTI crude was up 2.22%, while Brent crude was up 2.24%.
“The oil market has been dominated by predictions of weakening demand. Fears of a slowdown in global growth have been building as we approach year-end,” said David Morrison.
Oil has experienced a 26% decline from its peak in September. The market has been primarily influenced by forecasts of reduced demand, with concerns about a potential global growth slowdown intensifying as the end of the year approaches.
“While there’s plenty of evidence of slowing economic growth for China, the Eurozone (driven by Germany), Japan (an overnight downward revision of GDP), and the UK, the jury is still out when it comes to the US. After all, we’ve just seen an upward revision to the US’s Q3 GDP number to +5.2% from 4.9%. How could that possibly be turned around into a recession in 2024?” Morrison said.
Adding to that, “there were so many voices forecasting a US recession this year, and all were widely off the mark. Anyone calling for one next year can be accused of crying wolf. And yet, it could happen, and if it did, it would explain why the market is pricing in rate cuts of 125 basis points in 2024, despite the Fed warning not to get carried away.”