Oil prices trend predication

The oil cartel and its allies are considering an output cut of more than a million barrels per day, according to OPEC+ sources who spoke to Reuters.

“The OPEC ministers are not going to come to Austria for the first time in two years to do nothing. So there’s going to be a cut of some historic kind,” Dan Pickering, CIO of Pickering Energy Partners, said, referring to the group’s first in-person meeting since 2020.

Supply-side factors

In addition to a production cut by OPEC+, Pickering cited other supply-side factors that will also prop up oil prices for the next four to eight weeks.

“We’re going to see more support from the supply side if sanctions kick in from Europe towards the end of the year as the U.S begins to shut down its deliveries in November,” he said, referring to the U.S. government’s emergency stockpile that’s tapped when energy markets are in turmoil.

A few weeks ago, the U.S. Energy Department announced it would sell up to 10 million barrels of oil from the SPR for delivery in November.

The EU’s sanctions on seaborne imports of Russian crude will kick in in December. The ban could exacerbate worries over an already tight energy market, brought on by strong demand as economies bounced back from the pandemic.

“OPEC is no particular friend of oil price softness, gasoline prices going down … despite what people will say, we’re gonna see some pretty sticky energy inflation as we move forward over the next couple of years.”

At the start of September OPEC surprised markets and announced a small oil production cut of 100,000 barrels per day to bolster prices.