Crude Oil: WTI A few weeks ago, rumours floated of a potential aggressive production cut at the upcoming OPEC+ meeting, perhaps as large as 1.4 million barrels per day. However, that now looks unlikely, as President Trump has simultaneously protected Saudi Arabia from international outrage over the Khashoggi murder, at the same time that he has pressured them into keeping oil prices low. Russia is also not keen on a large production cut. That leaves Saudi Arabia looking for a “quiet cut,” which would mean taking production back down to previously agreed upon production limit – around 10 mb/d, down from the current 11 mb/d.
Trump wants low oil prices, but U.S. shale could take a hit. The pressure campaign by the White House to deter OPEC+ from cutting production could succeed in keeping crude prices low, but prices are approaching a level that could damage U.S. shale companies. “We're at the point where we're nearing full cycle break-evens for Permian producers and depending on how long this lasts, we might see an impact on capex budgets over the next few months,” Muhammed Ghulam, senior research associate at Raymond James, told CNBC. |
