OPEC+ Exceeding Expectations Cuts Achieve "Five Consecutive Rises" in Crude Oil

During the National Day holiday, the performance of crude oil in the outer plate was very strong, closing higher
for five consecutive days.
As of Friday's close, WTI crude oil rose $13.
15/b, or 16.
5%, to $92.
64/b, as of Friday's close; The Brent crude oil 12 contract rose $12.
78/b, or 15%, to $97.
92/bbl
.
After the domestic opening, SC crude oil is most likely to make up for the rise
.
Affected by the rise in crude oil, the price of fuel oil in Singapore also rose sharply, with the price of low-sulfur MOPS rising by 59 US dollars / ton, the price of high-sulfur 380 fuel oil MOPS rising by 24.
95 US dollars / ton, the high sulfur cracking further fell below -30 US dollars / barrel, and the high and low sulfur price difference was further expanded
.

Gui Chenxi, chief energy analyst of CITIC Futures, told the Futures Daily reporter that the most important thing for crude oil during the National Day holiday is the unexpected production cut of OPEC+, which pushed the price of Brent crude oil futures from $86 / barrel before the holiday to $98 / barrel
.

It is understood that the 33rd OPEC and Non-OPEC (OPEC+) Ministerial Conference was held on October 5, 2022, which was the first offline meeting
of OPEC+ after the epidemic in March 2020.
It was decided to reduce the production quota for November and December by 2 million bpd
compared to October.
From the perspective of actual production, because the previous OPEC production continued to fall short of the quota, the reduction in production was much smaller than the quota adjustment
.
Compared with the August production and November quotas, the only countries that actually need to reduce production are Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Algeria, Gabon and Oman, with a total reduction of about 850,000 barrels per day
.

Gui Chenxi said that OPEC+ production cuts beyond expectations have had a strong boosting effect
on international crude oil prices.
Regardless of other variables, or raise the current oil price center by at least $10/bbl; Bottom support moves upwards from $80/b to $90/bbl, with a possible break above $100/bbl
.
The upside height depends on the duration of the OPEC+ production cuts, and if it is only implemented for two months, the degree of impact is relatively limited; If it continues into the whole of next year, it will continue to push up oil prices
.

"In addition, we also need to pay attention to the degree of fermentation of downside risks, and if the pressure factors are realized, it may be partially hedged against the upward promotion
of oil prices by reducing production.
" Gui Chenxi said that this includes the adverse impact on the global economy and the multiple countermeasures being explored by the Biden administration
.
The current round of OPEC+ production cuts has aroused strong opposition from the Biden administration, saying that it is considering a number of measures to stabilize oil prices
.

Some analysts have proposed that the main logic of the current dominant oil price is still the economic downturn expectation under the background of the Fed's interest rate hike superimposed on the risk premium brought about by the lack of remaining capacity under the control of OPEC+ and the Russian-Ukrainian conflict, short-term crude oil may still continue to rise, but the OPEC+ production cut beyond expectations may trigger the Fed to accelerate the pace of interest rate hikes, and next Monday's opening domestic crude oil will be dominated by
making up for the rise.