Don't Believe The Critics: OPEC Cuts Are Working
When OPEC and its partners led by Russia first announced additional oil production cuts last year, the market brushed it off. Prices fell. Forecasts for peak oil demand echoed off news publications.
OPEC+ persevered and the market finally caught up.
McKinsey reported in Feb that global oil inventories had shed 32 million barrels the previous month, with the tightening especially marked in OECD countries.
Now that fresh demand data is coming in, prices are climbing higher.
It appears that most forecasters ignored the fact that production curbs amplify the disruptive effects of unforeseen events on market balance. In this case, these effects have come from the Red Sea situation where repeated Houthi attacks on ships have led to a massive reorganization of maritime transport that has added at least 100,000 bpd to global daily oil demand, and, more recently, Ukrainian drone attacks on Russian refineries that have affected fuel supply and raised concern about crude supply.
Many analysts believed the oil demand decline predictions coming from organizations with a vested interest in such a development. And they missed the supply tightening risk.
That tightened supply is already a fact.
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bullrider_21OP : OPEC cuts are working and oil prices are rising.
SpyderCall bullrider_21OP: Agreed. Oil and energy prices are in a strong rally. Energy related stocks have been some of the best performers for a few weeks now. Ever since Russia reduced their gasoline exports, gas prices have been shooting up as well.
And we all know that oil and energy prices are the biggest drivers of inflation as just about every good and service requires oil or oil by products somewhere within the production, transportation, consumption, and the facilitation of buying and using the good or service.
The media will not point this fact out like they should. They mostly blame inflation on other factors and neglect to mention energy prices most of the time.
bullrider_21OP SpyderCall: The rise in energy prices have resulted in US inflation rising again.
SpyderCall bullrider_21OP: agreed.