The deal agreed by the OPEC+ to extend production cuts will speed market stabilization as the demand is recovering, strategists at TD Securities apprise.
Key quotes
“OPEC+ agreed to extend its historic 9.6m bpd cut for another month, before production curtailments begin to slowly taper. The agreement is for 100k bpd lower than the prior deal, because Mexico will end its supply constraints.”
“While this agreement was broadly expected, it will help accelerate the Great Rebalancing as we expect the combination of market-driven declines, OPEC+ cuts and demand normalization will push the global crude market into a deep deficit this quarter and next.”
“Libya’s output has been deeply disrupted by the civil war over the past months, but the country’s largest field will slowly begin resuming production following a brokered deal between rival factions. It will take months for the field to return to full capacity, but Libya’s return will eventually bring more barrels on the market.”
“The key risk for energy markets remains a resumption of production growth in the US shale patch, as prices sharply recover closer towards break-even levels.”
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