OPEC+ output cut set to wipe out this quarter’s oil surplus

The surprise production cut by OPEC+ will eliminate the current supply surplus and push world oil markets into a deeper deficit later this year.

Before the intervention, global oil supply was set to exceed demand by about 500,000 barrels a day from April to June, before flipping into a deficit in the second half as China’s post-pandemic demand recovery picks up, according to Bloomberg calculations using data from the International Energy Agency.

The cutbacks unveiled by Saudi Arabia and its partners on Sunday change that picture. The excess anticipated this quarter is almost wiped out to leave markets in balance, while the stockpile drawdowns expected from July are considerably more pronounced.

That ought to put the oil price recovery on a much stronger track. Goldman Sachs Group Inc. has upgraded is year-end forecast for Brent futures to $95 a barrel, while consultant Rapidan Energy Group says a surge well into triple-digits is possible