Morning Highlights
Morning Highlights

6-3-24 OPEC+ Announcement Bearish for Prices

Scott Wilson

Jun 3, 2024

Outlook: OPEC+ announced at their meeting yesterday that the group will extend their production cuts well into 2025 to drive crude prices higher in the face of falling demand, high interest rates, and non-OPEC production. OPEC+ has made a series of output cuts since late 2022 totaling 5.86 million barrels when energy prices remained weak after the global covid pandemic. The curbs include 3.66 million bpd due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd, expiring at the end of this month. According to Reuters, OPEC+ agreed to extend the cuts of 3.66 million bpd by a year until the end of 2025 and prolong the cuts of the 2.2 million bpd by three months until the end of September 2024. The 2.2 million bpd voluntary constraints will then be gradually phased out over the next year from October 2024 to September 2025. OPEC+ expects demand for the group's crude to average 43.65 million bpd in the second half of 2024, producing a stock drawdown of 2.63 million bpd if the group maintains its April output of 41.02 million bpd. OPEC+ was supposed to set their 2025 output quotas but decided to postpone those discussions until November 2025 to assess capacity figures for 2026. However, The group agreed to increase the UAE’s production quota by 0.3 million bpd, to 3.2 million bpd. OPEC+ will hold its next meeting on December 1, 2024. Saudi Aramco’s $12 billion stock offer sold out shortly after the deal opened on Sunday as the government is seeking funds to help pay for a massive economic transformation plan (Bloomberg). The OPEC+ announcement has a bearish tone considering the phase out of the voluntary production cuts will coincide with increased U.S. production in the second half of the year. Momentum to the upside will be from other sources, such as escalating geopolitical tensions instead of the OPEC+ announcement.


  • The OPEC+ members included in the 2.2 million bpd voluntary cut are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia, and the United Arab Emirates.
  • OPEC+ agreed to use independently assessed capacity figures as guidance for 2026 production instead of 2025 production. (Reuters)
  • The International Energy Agency has a much lower estimate of 41.9 million bpd for 2024 OPEC+ oil demand.
  • The current OPEC+ member production curbs of 5.86 million bpd accounts for around 5.7% of global demand.  
  • Managed money participants increased their net length by 39.2k lots through last Tuesday, including increases of 34.6K for WTI crude and 4.6K of Brent crude.
  • As of 9:20 am CST: Brent crude oil down $1.84 to $79.27, US dollar index down $0.437 to 104.190 while the nearby e-mini S&P 500 futures contract is up 6.00 to 5301.50.


  • NYMEX heating oil net length increased by 1,486 lots, including 1,801 new longs and 315 new shorts.
  • Lead month diesel futures set a new fresh 12-month low in morning trade, the lowest level since June 13, 2023.
  • Diesel futures remain in contango through the February 25 contract.


  • NYMEX gasoline net length decreased by 4,883 lots including a reduction of 6,556 longs and a reduction of 1,673 shorts.
  • Gasoline futures touched the lowest level since Feb 14 this morning, almost 50 cents below the April 12 high and the lowest level since the March 1 blend change.
  • Gasoline futures remain backwardated through the April 25 contract.


  • Conway is trading at .6800 while Belvieu is trading at .6950.
  • Conway Swap Oct24-Mar25 strip indicative midpoint ~.7449.
  • Conway propane is trading at 38% to WTI.

Natural Gas

  • Natural gas prices saw some strength this morning as the Nyhamna facility in Norway announced an unplanned outage yesterday, halting its normal capacity of 80 mcm/d. (GS)
  • NYMEX natural gas net length increased by 26.6K lots through Tuesday, May 28 including a reduction in short positions of 30.2K lots and a decrease in long positions of 3.5K lots.
  • Dutch natural gas rallied 10% this morning and now trades at the highest level this year after multiple unplanned outages were announced over the weekend. (GS)
Lead month gasoline futures chart showing the 50-cent drop from the most recent high and the lowest intra-day trade since the March 1 blend change: