Crude prices are slipping back towards 90 a barrel in the Brent index, with WTI starting to slip below 85.
This is in spite of OPEC+’s recent decision to cut oil production targets by 2 million barrels.
There are a lot of factors at work. For starters, most OPEC nations weren’t even reaching their orginal targets, meaning the cut was actually closer to being just north of 500,000 barrels.
Secondly, crude reserves actually had an unexpected build this cycle, where most predicted a draw. This means that more oil was bought and stored than was used and refined, as opposed to a draw where more oil was used than was stored.
The most important factor is that ultimately OPEC was fighting the market and the market is winning. Covid restrictions in China, draw backs in Europe, a super strong dollar, and the risk of a global recession has oil prices very suppressed.
The bulls that expected oil prices to hit 100 by mid October have once again been shot down. In fact, oil and gas bulls have been on an unprecedented losing streak lately.