What can OPEC do?

Brent 1st-nearby price is rather stable, just below $90/b. The market is not expecting much from the OPEC+ meeting today. A further production increase of 400kb/d is expected to be announced for next month, but OPEC and Russia have not demonstrated their ability to meet this roadmap in recent months and fears of sanctions affecting Russian exports add further doubt.

Weekly data from the US Department of Energy is expected to show a decline in crude inventories according to API, while the consensus is for a third consecutive increase. However, there is agreement that distillate stocks have continued to fall and gasoline stocks have continued to rise ahead of the driving season. The cold snap sweeping the country, which could both increase demand and restrict production, will not yet be reflected in these statistics.

Following Chevron’s announcement of a 10% increase in shale oil production this year, Exxon has announced a target increase of 25%. This is significant, but we are talking about a total of +170kb/d. The EIA expects a total increase in US production of 630kb/d by the end of the year, compared to the expected increase of OPEC+ (400kb/d per month), even if this target is too ambitious.