As international oil prices have fallen significantly in recent weeks, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers decided on the 5th to slightly reduce production in October, reducing monthly production by an average of 100,000 barrels per day.
Analysts believe that although the scale of production cuts is small, oil-producing countries have released a clear intention to maintain oil price stability, and the resistance to further decline in international oil prices has increased.
Recently, the main contract prices of West Texas Intermediate crude oil in New York and Brent crude oil futures in London have fallen to the level before the outbreak of the Ukraine crisis, and continue to decline.
Crude oil futures in New York fell to below $87 a barrel after hitting a recent high of $122.11 a barrel on June 8.
A significant drop in oil prices is undoubtedly detrimental to oil-producing countries that rely on crude oil exports. OPEC has repeatedly emphasized the policy goal of maintaining the stability of the oil market.
OPEC issued an announcement on the 5th saying that the ministerial meeting of OPEC and non-OPEC oil-producing countries held on the same day noted the negative impact of current market volatility and declining liquidity, as well as the need to support market stability and operational efficiency. Evaluate continuously and be prepared to make quick adjustments to production in different ways as needed.
UBS said on the 6th that although the average daily production cut of 100,000 barrels is insignificant compared with the world's average daily demand of 100 million barrels, the message of the decision is that OPEC and non-OPEC producers will defend oil prices.
The group's oil analyst Giovanni Stanovo said the decision to cut output showed producers' eagerness to keep prices above $90 a barrel.
Bill Fallon-Price, head of the Enverus macro research team at the U.K.-based energy services agency, said that while the scale of the production cuts was irrelevant, it conveyed a sense of OPEC and non-OPEC producers returning to price watch mode. Signal.
Analysts pointed out that at present, the factors pushing up oil prices include the European energy supply difficulties pushing up the demand for oil as an alternative fuel, and the members of the Organization for Economic Cooperation and Development will end the release of strategic crude oil reserves.
At the same time, the interest rate hikes by central banks in Europe and the United States have raised concerns about slowing economic growth and oil demand, and the negative factors such as the repeated delays of the new crown epidemic cannot be ignored.
Multiple uncertainties mean that oil prices may remain range-bound by the end of the year.
However, the intention of stabilizing oil prices released by OPEC and non-OPEC oil-producing countries shows that oil prices may continue to fall significantly or face resistance.
Francesco Blanche, head of commodities and derivatives research at Bank of America, said recently that major oil producers need to simultaneously deal with significant supply and demand risks in the oil market, and these risks may push oil prices to $5 to $20 a barrel in the next few months. the rise and fall.
Blanche expects Brent crude futures to trade at $100 a barrel in 2023.
UBS expects Brent crude futures to be around $125 a barrel by the end of the year.