Back to blog

Uncertainties between the largest oil producers

The Organization of Petroleum Exporting Countries and allies (OPEC+) is the group of countries that together contribute to 40 % of global oil production which means they can significantly control oil prices. Since oil is still one of the world's most prominent commodities, it can have a huge impact on everyday lives. Recently traders were anxiously expecting what the outcome of the latest OPEC+ meeting that happened on 30th of November would be. 

Uncertainties between the largest oil producers

The main agenda of the OPEC+ meeting was the oil production reduction for the year 2024. Oil prices have steadily been dropping since September 2023 with few bumps in October. Prior to the meeting, investors already expected some production cuts, so the market was quick to adjust. In addition to that, western oil demand has now dropped with continued boycott of Russian oil due to the war in Ukraine, transition to the green economy in Europe and countries trying to diversify their suppliers.

 

Finally, after the Thursday meeting, it was clear that production reduction will be even smaller than expected. The organization said it will cut the production by an additional 2.2 million barrels per day (bpd) in the first quarter of 2024. However, about 1.3 million bpd were already in place voluntarily by Russia and Saudi Arabia. That means that real cuts were about 900 thousand overall and traders were disappointed with the prices dipping even more. Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria combined cuts amount to 2.2 million bpd will be gradual through the first quarter of 2023. Saudi Arabia agreed to gradually get to 1 million bpd cut until the end of Q1 while Russia will reduce production by additional 200 thousand bpd.

Brazil will be the newest member of the OPEC+ starting next year, although it hasn't agreed to any production cuts itself. Since the cuts were all voluntary, there are some speculations of disagreements among members.

 

China's lack of oil demand contributes to the concerns of investors as it is the world's largest oil importer. Its industry still hasn't recovered to pre-covid levels, and it shows little signs of improvement. The Caixin/S&P Global manufacturing purchasing managers' index rose from 49.5 in October to 50.7 in November, which is above the desired 50 milestone. However, the readings came the day after the survey which showed contractions in manufacturers’ as well as non-manufacturers’ activity.

 

Brent Crude futures for February have risen by 0.1 % in response to OPEC+ meeting outcome. Goldman Sachs Crude forecast for December is “moderately tilted” downwards after the meeting compared to previous estimates as they called oil producers move “a temporary response” and “difficult to implement”.[1]

 

Oil price remains volatile also because of tensions on the world’s stage with ongoing wars in Europe and the Middle east. Countries of the EU and elsewhere have failed to diversify their oil suppliers over the years which resulted in this commodity becoming a tool of control and hybrid warfare by superpowers with authoritative regimes.

 

-----

[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. Forward-looking statements, by their nature, involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.

 

Warning! This marketing material is not and should not be construed as investment advice. Past data is not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. CAPITAL MARKETS, o.c.p., a.s. is an entity regulated by the National Bank of Slovakia.

Read more

NVIDIA Expects Slower Growth but Continues to Rule AI

NVIDIA Expects Slower Growth but Continues to Rule AI

Arguably one of the most talked-about companies on Wall Street this year, NVIDIA released its quarterly financial results on November 20, 2024. Once again, the company exceeded expectations, more or less doubling its revenue and profit compared to the previous year. Despite a projected slowdown in revenue growth due to delays in delivering its latest artificial intelligence (AI) chipsets, investors continue to view NVIDIA's stock as among the most attractive on the market.

Dell Technologies: AI Has Already Delivered Results for Servers, Now It's Time for PCs

Dell Technologies: AI Has Already Delivered Results for Servers, Now It's Time for PCs

Dell Technologies, best known for its personal computers, has seen impressive overall revenue growth in the past fiscal period, but the sales in its personal computer segment have declined. However, a market recovery is expected in not-too-distant future, supported by artificial intelligence (AI). Additionally, Dell is building a reputation in AI-optimized servers. Its stock has had a turbulent year, but the price trajectory remains positive.*

Walmart Raises Forecasts Again, Ready for Holiday Shopping Spree

Walmart Raises Forecasts Again, Ready for Holiday Shopping Spree

Retail giant Walmart has released its third-quarter earnings, which not only exceeded expectations but also demonstrated the company’s readiness for the peak holiday season. This led to an increase in full-year forecasts. Following the announcement, shares hit an all-time high, but they are attractive to investors mainly due to their stability and consistent financial performance of the retailer.* The company continues to be synonymous with retail resilience and efficiency, despite the challenges it is likely to face in the near future.

Bitcoin Breaks Records, "Trump Rally" Also Dominates the Crypto World

Bitcoin Breaks Records, "Trump Rally" Also Dominates the Crypto World

The post-election market rally, which took over U.S. markets, has spilled over into the cryptocurrency world, with Bitcoin setting new records nearly every day.* Investors who had previously avoided these assets found an opportunity to explore them in 2024 through newly launched Bitcoin-associated Exchange Traded Funds (ETFs). The largest of these, the iShares Bitcoin Trust by financial assets manager BlackRock, has already surpassed the volume of the renowned gold-tracking fund.