OPEC+ set to boost production further as demand outlook improves? OPEC+ set to boost production further as demand outlook improves? OPEC+ set to boost production further as demand outlook improves?

OPEC+ set to boost production further as demand outlook improves?

Ole Hansen

Head of Commodity Strategy

Summary:  Crude oil trades steady ahead of today's virtual OPEC+ meeting where the group will meet to assess the global supply and demand situation, and given the latest developments we see no reason why the group should not go ahead and agree on a monthly increase of 400,000 barrels/day, this time for October.

Crude oil trades steady ahead of today’s virtual OPEC+ meeting where the group will meet to assess the global supply and demand situation. With Brent crude oil trading back above $70 following the mid-August slump, and with the negative demand impact from the delta virus starting to ease, we see no reason why the group should not go ahead and agree on a monthly increase of 400,000 barrels/day, this time for October.

Following the fraught July meeting when a plan to increase production by 2 million barrels per day by year-end was derailed by a row over baseline levels, today’s meeting is unlikely to spring any major surprises. Not least after the OPEC+ joint technical committee (JTC) on Tuesday said that it expects the global oil market to remain in deficit this year before returning to a sizeable 2.5 million barrels/day surplus in 2022, potentially an expectations that could see the group slam the brakes on further production increases after December.

Source: Saxo Group

Later today at 14:30 GMT, the Weekly Petroleum Status Report from the US Energy Information Administration is expected to show another weekly drop in US crude oil and gasoline stocks. The report will not include the impact of Hurricane Ida which is estimated to have temporarily closed down around 95%, or 1.7 million barrels/day, of offshore crude output and a 1 million barrels/day reduction in refinery demand due to shutdowns, power outages and flooding. With this in mind, the market reaction to the report is likely to be muted given the distortions that will occur during the coming weeks.

During the third quarter we have been looking for the price of Brent crude oil to pivot around $70, a level which most OPEC+ producers can accept as being not to cold, hurting revenues, and not to hot meaning it will not promote accelerated non-OPEC production growth. Confirmation of the OPEC+ production increase together with fading impact of the recent disruptions in Mexico and the US Gulf coast should ensure the price continues to trade rangebound over during the coming months, before potentially moving towards $80 and beyond in the unlikely event demand exceeds OPEC+ and other producers ability to provide the barrels needed to balance the market.

Source: Saxo Group

Speculators in the oil market are often either driven by the need to hedge macro-economic developments such as reflation, others respond to changing oil fundamentals while the majority in our opinion are mostly focused on signals given through the price action. The loss of momentum and lower prices since the July peak have led to a one-third reduction in the speculative net long in WTI and Brent crude to an 11-month low around 500 million barrels. Once the technical and / or fundamental outlook changes these funds will have plenty of firepower to push the market.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.