Breaking News: OPEC+ Plans Early Oil Output Increase, HSBC Analysts Say
In a surprising move, OPEC+ is reportedly planning to ramp up oil output starting December 1, leading to concerns about a potential oversupply in the market. HSBC analysts believe that this earlier-than-expected return of OPEC+ barrels could put downward pressure on crude prices, with the market expected to be in a surplus of 600,000 barrels per day next year.
This decision marks the end of a long period of supply tightening by the producer group, which had previously restricted around 3.4 million barrels per day from October 2022. Looking ahead, the analysts predict that the oil market will remain oversupplied, as OPEC+ has limited room to unwind remaining cuts.
As a result of this development, HSBC has revised its price forecasts for 2025 and beyond, lowering them from $76.5 per barrel to $70 per barrel. On Tuesday, oil prices fell sharply as concerns about weak demand growth overshadowed worries about escalating tensions in the Middle East.
At 06:10 ET, the Brent contract was down 1% at $71.02 per barrel, while WTI futures traded 1.2% lower at $67.36 per barrel. The situation in the Middle East remains tense, with Israel launching limited raids against Hezbollah targets in Lebanon, risking further conflict in the region.
Despite these geopolitical tensions, a slowdown in Chinese manufacturing activity in September has raised concerns about future demand for crude. The American Petroleum Institute is set to release its weekly estimate of US crude oil and fuel stockpiles for the week ending September 27.
In conclusion, investors should be prepared for increased volatility in oil prices as OPEC+ looks set to boost output sooner than expected. This could have a significant impact on global markets and consumers, potentially leading to lower fuel prices but also signaling a potential oversupply in the market. Stay tuned for further updates on this developing situation.