Saudi Arabia could make a surprise cut in oil production, sending prices soaring and the futures market into backwardation, says 30-year-old energy expert Anas Alhajji.
Oil prices fell due to the postponement of the OPEC from November 26 to 30. The virtual meeting implies an agreement among members. There is a possibility of production that were not expected by the markets. Oil prices continue to be affected, with WTI falling by about 2.4% to $76.01.
The oversupply has led to a 19% drop in prices since September. Traders are awaiting an announcement from OPEC+, while expert Anas Alhajji warns of a possible surprise from Saudi Arabia.
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The upcoming virtual OPEC meeting on November 30 implies a prior agreement among members on production quotas. According to Anas Alhajji, there are three levels of oil production reduction in Saudi Arabia that can be implemented: through OPEC+, by extending voluntary cuts, and by new voluntary cuts. Cuts until January or the first quarter of 2024, due to a seasonal decline in demand.
Additional voluntary cuts from Saudi Arabia may also be announced. Mr. Alhajji points to the importance of the future supply curve and the need to invert it with cuts to encourage oil storage.
Source: finance.yahoo.com
