On November 21, WTI crude oil fell 0.55%, now trading at 77.Near $17 / barrel。Boosted by news of production cuts, WTI crude rose more than 2% yesterday to close at 77.$60 / barrel。

Two major crude futures rebounded more than 7% on news of production cuts

According to OPEC + sources, the Organization of Petroleum Exporting Countries, including Russia, is now preparing to discuss the need for continued production cuts at current production capacity to boost sluggish oil prices at a ministerial meeting of oil producers on November 26.。

crude oil futures prices have fallen nearly 20 percent since late september。According to the latest CFTC data, speculators' net long positions in WTI crude oil fell by 11,257 contracts to 124,296 contracts in the week ending November 14, a new 19-week low.。This suggests a brief term premium across term contracts after WTI crude oil futures fell into a technical bear market during the session。

In addition, the monthly spread between Brent and WTI crude oil quickly fell into a positive spread last week due to consecutive declines。In the positive spread market, the recent commodity prices are lower than the futures prices in the next few months, which indicates that the current supply of crude oil market is very sufficient, the Organization of Petroleum Exporting Countries' original production cuts have gradually been digested by the market.。

So, after the news of production cuts, Brent crude oil and WTI crude oil bulls quickly got a boost, the two major international crude oil futures rebounded more than 7% in just two trading days, a sweep of the bear market haze。

OPEC + production cut probability of 40% Brent crude oil this season or rise to $90 / barrel

OPEC + may cut output by another 1 million bpd at its Nov. 26 meeting。The reason is that some members of OPEC + are unhappy with the humanitarian crisis in the Gaza Strip and may send a message to the United States by further cutting oil production.。

In response, John Kilduff, a partner at Again Capital LLC, said OPEC's view was clear that it would cut production further.。But any production cuts are expected to be modest in light of the current capacity situation, as the Saudis have already cut a significant portion of their production and don't know how much more they can contribute to the reduction。

Crude oil broker PVM Oil Associates senior market analyst Varga (Tamas Varga) believes that the market trend basically reflects the changes in U.S. oil inventories, Brent crude oil fell below $80 reflects the shake of investor confidence, "in order to stabilize the market, OPEC + production decision is not unexpected, but Saudi Arabia will also face greater resistance than before, in addition to market share competition, the oil-producing countries will once again stand against the United States.。"

Goldman Sachs, a leading investment bank, said that according to its statistical model of OPEC decision-making, further production cuts are not ruled out given the decline in speculative positions and spreads and higher-than-expected inventories。Goldman Sachs expects Saudi Arabia's unilateral 1 million bpd production cut to be extended until the second quarter of 2024 and will not be gradually reversed until July next year.。

So far, CME crude options market data show that OPEC + is more than 53% likely to decide on further production cuts at its upcoming meeting, while the probability of maintaining the existing production cut plan is about 40%, and the probability of production cuts has not yet taken an absolute advantage.。Nevertheless, the stabilization of WTI oil prices began to gradually raise speculation about a possible increase in crude oil purchases.。The commodity's range swing showed solid support and limited upside, setting the stage for this week's move, analysts said。

Looking ahead to the market, Deutsche Bank analyst Michael (Michael Hsueh) said the price below $80 / barrel is too low for Brent crude oil.。He believes that the average price of Brent crude oil in the fourth quarter may reach $88 / bbl, based on a forecast of a 300,000 bpd crude oil inventory deficit in the fourth quarter, and may also rise to $90 / bbl for the rest of the quarter.。

Michael Hsueh also said the possibility of further tightening of Iranian sanctions, as well as the limited availability of new investment plans in Venezuela so far, would have supported Brent crude prices.。Assuming no change in OPEC policy in the first half of 2024, the oversupply will reach 500,000 bpd.。But at this weekend's meeting, OPEC is likely to deepen its policy of production cuts, and we are reluctant to bet against OPEC.。If supply falls by 1 million barrels a day in the first quarter of next year, it could easily lead to a recovery in Brent crude oil prices to $90 a barrel.。

In addition to OPEC + 's actions, analysts also said investors still need to pay attention to last week's warning of possible deflation at Wal-Mart, the largest U.S. retailer, and that if the U.S. economy does fall into deflation, it is bound to have another impact on oil prices.。