Crude Oil Futures Are Leading The Energy Complex Higher This Morning After The Sunday’s OPEC+ Meeting

Crude oil futures are leading the energy complex higher this morning after the Sunday’s OPEC+ meeting saw Saudi Arabia pledging to cut its oil production by 1 million barrels per day in July. For now, the other member nations will be keeping their output at previously agreed upon levels for the rest of 2023, but the cartel as a whole plan to cut its baseline output by 1.4 million barrels per day in 2024. Keeping a lid on the rally: there’s a big question mark surrounding whether or not A) Kingdom sticks to its plan for next month and B) if OPEC+ will retain their 2024 sentiment for the next 6 months, especially given how fluid the global economic and political landscape can be.

Money managers might be kicking themselves this morning after bolstering their bearish bets on WTI last week by nearly 26,500 short positions. The sentiment for RBOB, HO, and Brent futures seems to be the opposite, showing the ‘smart money’ increasing their net long positions for each benchmark. It will be interesting to see, in next week’s report, how seriously speculators are taking Saudi Arabia and the rest of OPEC+ at their word to stick to further production cuts.

Baker Hughes reported decline of 15 active oil production rigs in the US last week, bringing the total to the lowest level since late April of last year. The production platform closures seem to be pretty spread out with the Eagle Ford, Haynesville, Permian, and Williston major basins showing a shutdown of 2 rigs each. Continued rig shutdowns, which is at a net decrease of 7% YOY, is being attributed to an increase in costs due to inflation and lower oil prices (which made a lot more sense before this morning).

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