Oil is now at higher levels than just a few hours ago, even despite Putin's recent statements to Interfax news agency. Putin indicated that he supports the production cuts included in the OPEC+ agreement, but that Russia risks losing market share. This could suggest that Russia is not happy about not being able to take advantage of any earnings opportunities. It already appears at this point that the cuts from OPEC+ have reached astronomical levels. One may ask oneself if this agreement is tenable? As long as everyone sticks to the plan, oil can be controlled by the cartel. However, if someone decides to produce more, the whole agreement could collapse.
Of course, it's important to remember that at this point, it's not possible for OPEC+ to suddenly bring those 5+ million barrels per day back to the market. A lot of that production is not recoverable, even if the production capacity in the entire OPEC+ cartel is estimated to be more than those 5 million. It seems that the entire agreement is now based on Russia and Saudi Arabia. Will the U.S. be able to intervene with Saudi Arabia before the elections to lower oil prices? If so, the entire agreement could collapse later this year. It is worth mentioning that OPEC+ recently decided to extend the agreement on voluntary cuts to Q2 2024. 
OPEC+ is already cutting more than 5% of global oil supply. We may now be dealing with tensions related to the Middle East, which would theoretically require more production from oil to stabilize the market. OPEC+, however, is choosing not to restore some production, and even with a forecast of strong demand growth of 2.2 million barrels per day this year, it has no intention of adjusting to the current situation for the time being. Source: Rystad Energy, Financial Times
Oil is rebounding and remains above the 25 DMA. The current doji candle, however, speaks of great indecision. In theory, the cuts should support oil, but on the other hand we have mixed reports of demand from China. Source: xStation5
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile appThis content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
