OPEC announced on its official website that the eight countries participating in the "voluntary production reduction measures" have agreed to extend the plan for two months until the end of November 2024. Previously, consulting firm Energy Aspects pointed out that the recent weak demand added to the possibility of OPEC+ delaying production increases.
On Thursday (September 5th) local time, OPEC announced on its official website that the eight countries participating in the "voluntary production reduction measures" have agreed to extend the plan for two months until the end of November 2024.
The press release also posted a timetable for gradually restoring production from December, stating that 2.2 million barrels per day of production cuts will be canceled as of December 1st according to the new plan. However, OPEC added that participating countries can flexibly suspend or revoke these production adjustment decisions as needed.
In June of this year, Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, 8 OPEC+ member countries, decided to extend the voluntary production reduction measures of 2.2 million barrels per day until the end of September this year.
At that time, the Saudi Energy Minister mentioned that if the organization considers the market to be weak, it may suspend or revoke the "production increase" plan. Previously, consulting firm Energy Aspects pointed out that the recent weak demand added to the possibility of OPEC+ delaying production increases.
It is worth mentioning that the crisis of the Libyan Central Bank once gave OPEC+ member countries hope for a tightening supply. However, earlier this week, the Governor of the Libyan Central Bank stated that the factions are close to reaching an agreement and are expected to resume oil production soon.
Before OPEC's decision was announced, Citigroup analyst Anthony Yuen wrote in a report, 'If OPEC+ cannot guarantee an indefinite extension of the current production cut policy, the market may lose confidence in the organization's ability to defend a $70 goal.'
Before the pre-market trading on Thursday, the ADP employment report, known as 'mini non-farm payroll,' added 0.099 million jobs in August, which not only fell below the market's expectation of 0.145 million, but also marked the lowest value since January 2021, suggesting that the labor market is starting to weaken in a high-interest-rate environment.
Yesterday, the Federal Reserve's 'Beige Book' report on the national economic situation was released, showing that only 3 out of the 12 regions in the USA experienced slight economic growth, while the number of regions reporting flat or declining economic activity increased from 5 in the July report to 9 recently, dampening market expectations for fuel demand.
Editor/ping