BAKU, Azerbaijan, October 7. The latest OPEC+ decision should help to tighten the underlying market, Trend reports via Fitch Solutions.
“Brent crude has posted gains this week, rising by more than 5% to reach around USD93/bbl at the time of writing. The increase can be attributed to OPEC+ action, with the group meeting on October 5 and agreeing to a 2mn b/d collective cut, effective November,” reads the latest report from Fitch Solutions.
The report reveals that given that the cut is being calculated based off the group’s current quotas and that the majority of countries are already producing below this level, the realized cut will be far smaller. Nevertheless, it should help to tighten the underlying market and sends an important message, that the group remains committed to supporting prices.
“Brent has come under increased pressure from a deteriorating macroeconomic environment and rising fears of recession in markets including the EU and US. Several bright spots for demand remain, including economic reopening in China, a recovery in the aviation sector and gas-to-oil switching over the northern hemisphere winter. Nevertheless, sentiment in the market remains firmly bearish, poses considerable downside risk to our current forecast, which sees Brent averaging USD100/bbl next year,” the report says.
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