Output cuts from OPEC+ may deepen global oil market deficit
Output cuts from Saudi Arabia and Russia announced for August amount to 1.5 million barrels per day combined, and additional Algeria announced a voluntary cut of 20k bpd. While oil traded lower at the start of the new week in spite of those news, crude prices started to climb today in a limited liquidity trade amid US holiday.
It turns out that supply in August 2023 may be over 5 million barrels lower than a year ago. Of course, there are also issues with demand but according to EIA, Q3 and Q4 2023 will see a deficit of up to 2 million barrels per day. It should also be noted that the actual size of output cuts will be known after the fact and the market at the moment does not seem to believe that announced cuts will be fully implemented by Russia and Saudi Arabia and is more concerned with the economic situation.
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Brent (OIL) is breaking above 50-session moving average. Oil price moves have been limited by supply zone ranging between 50- and 100-session moving averages since July 2022. Bulls may now attempt to break above the 100-season moving average in the $78.30 area. A neckline of a quadruple bottom pattern can also be found in this area. Source: xStation5
