OPEC+ Extends Production Cuts Till End Of March 2025: Retail On Wait-And-Watch Mode

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, announced on Thursday that the member countries will extend their additional voluntary production cuts of 2.2 million barrels per day, announced in November 2023, until the end of  March 2025.

The eight members of the OPEC+ include Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.

The decision comes at a time when global oil demand remains lackluster and prices continue to lag.

OPEC+ said in a statement that the 2.2 million barrels per day adjustments will be gradually phased out on a monthly basis until the end of Sept. 2026 to support market stability. The monthly increase can be paused or reversed subject to market conditions, it added.

At the same time, the countries decided to extend the additional voluntary adjustments of 1.65 million barrels per day that were announced in April 2023, until the end of Dec. 2026.

Despite the decision to extend the production cuts till the end of March, oil prices failed to hold on to the gains made just before the announcement.

Brent futures maturing in February rose 0.53% and were trading near $72.67 per barrel. West Texas Intermediate crude futures maturing in January 2025 were up 0.63% and were trading near the $69 levels.

The United States Oil Fund LP, which tracks the daily price movements of light, sweet crude oil, was trading in the green on Thursday morning.

Retail sentiment on Stocktwits stayed in the ‘neutral’ territory (47/100), accompanied by high message volume.

USO Sentiment Meter and Message Volume as of 9:26 a.m. ET on Dec. 5, 2024 | Source: Stocktwits

Capital Economics analysts reportedly wrote in a note that while the decision by OPEC+ to delay the unwinding of some of its oil production cuts until April 2025 buys the group some time, the backdrop of weak global oil demand means it could easily find itself back in a similar position in three months’ time.

“In our view, the fundamentals for oil prices remain weak, and the risks to prices are skewed to the downside,” they said, according to a CNBC report.

The USO has gained over 9% since the beginning of the year.

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