The OPEC+ meeting has decided to reduce oil output by 2mln barrels per day. The UAE was supportive of oil output cuts, despite US pressure, but the ‘actual’ size of the OPEC+ cut is expected to be lower than the headline indicates. The OPEC+ meetings will no longer happen each month. The reason for the cut this week was in part due to the fall in winter demand for oil.
If you look at the seasonal chart for oil you can see how marked this fall in winter demand is. However, it is unlikely to play out this year.
One development to look out for is any peace that develops between Russia and Ukraine. If there is a peace deal found then oil prices can fall quickly in line with its seasonal bias for lower prices.
Major Trade Risks: If there is no peace between Russia and Ukraine then oil prices could buck their seasonal trend lower after these production cuts.
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