Goldman Sachs analysts have reportedly suggested that OPEC+ is likely to pause further oil production increases due to deteriorating global economic conditions. Goldman reportedly anticipates that OPEC+ will make a “final” decision in July to raise daily output by 411,000 barrels, but actual economic data may prompt a reassessment, according to @FirstSquawk, and lead to a halt beyond that.
If the Goldman predictions materialize, it will serve as another indication that OPEC+ is confronting increasing challenges amid signs of weakening global oil demand.
On May 6, OPEC+ moved to increase daily production by 411,000 for June, putting the total increase in the output target for the group for April, May, and June at 960,000 bpd, which indicates a 44% unwinding of 2.2 million bpd in output cuts.
OPEC’s surprise move to raise quotas significantly more than anticipated initially sent prices tumbling, though it means less to the market materially than would seem at first glance. As Oilprice.com noted last week, chronic overproducers like Iraq and Nigeria are already pumping over quota, so the new targets essentially just legalize the existing overproduction.
Despite these production increases, oil prices have shown resilience.
On May 12 at 1:11 p.m. ET, Brent crude was trading up 2% at $65.19, while U.S. West Texas Intermediate (WTI) crude was trading up 2.05% at $62.27, driven on Monday by news of perceived progress in U.S.-China tariff negotiations, which in turn signals to markets the potential for improved oil demand from the world’s two largest crude consumers.
By Charles Kennedy for Oilprice.com
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