Oil prices blast higher on reports that OPEC+ will deliver a substantial output cut this week to support the market. WTI and Brent’s near-term outlook appears to be improving following the steep sell-off over the past several months.
. However, the main bullish catalyst has been the news that the Organization of Petroleum Exporting Countries and its allies , who will meet in Vienna on Wednesday to decide on production policy, will deliver a substantial supply cut to stabilize the market, even if physical fundamentals remain extremely tight.OPEC+ could slash production by one to two million bpd
in an effort to avoid further weakness in the energy space following the sharp sell-off in recent months. By way of context, Brent was trading around $115 in mid-June, but has plunged towards $85 in late September on fears that the global economy could be headed for a damaging recession amid rapidly tightening financial conditions.
The anticipated output reduction is likely discounted by now, judging by how much crude benchmarks have risen since last week, so we may not see a significant reaction to the official decision tomorrow. However, the cartel's actions may act as a floor for the commodity going forward, preventing speculators from triggering another extreme and unwarranted sell-off onIn terms of the near-term outlook, oil’s prospects appear to be improving.
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