Saudi Arabia will defend oil prices.

[dan_s]

Note from Keith Kohl:

"We knew it was coming, it was only a question of how soon OPEC+ would announce the extension of its production cut deal.

Recently, the group decided to extend production cuts until the end of 2026 to assess the stability of global oil demand.

All year, concerns have been building over the strength of China's economic recovery and its impact on global oil demand. While OPEC+ remains confident in China’s recovery, Minister Salman admitted that some member countries not adhering to their production quotas presented a challenge.

As you know, the IEA predicts global oil demand will increase by 920,000 barrels per day this year, rising to just under 1 million barrels per day by 2025. HSBC analysts believe that this decision could signal concerns about sluggish demand, despite OPEC+'s November report projecting an increase of 1.54 million barrels per day in 2025.

The thing is, crude prices remained subdued in spite of the announcement, even falling slightly since the announcement was made. I’ve said this before, but the one thing we can count on are the Saudis defending $70 oil.

At some point, the market is going to realize that the supply/demand fundamentals are tighter than they think." < Each week EIA reports that crude oil, gasoline and distillates (the "Big 3") inventories are below normal for this time of year. How long can the market ignore this fact?
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I will be discussing this at our luncheon in Houston tomorrow.
> FEAR of "Drill Baby Drill" is overblown.
> U.S. oil production will not increase unless WTI oil price goes a lot higher.
> Non-OPEC oil production is going to peak at ~56.8 million bpd by the end of 2028. Starting in 2030, Non-OPEC production is expected to decline (unless there is a SIGNIFICANT increase in oil prices in 2028/2029).
> With global oil demand increasing by 1.0 to 1.5 million bpd each year, OPEC spare capacity will be gone by 2030.
> Bottomline: This world runs on oil-based fuels and other products. There is nothing that will replace it.