B of A BofA Securities commodity strategist Francisco Blanch warned clients to avoid fighting OPEC,
“Don’t fight the Fed and don’t fight OPEC+ either. Brent crude oil prices have rolled over from a high point of $139/bbl in 1H22 to a low point of $70/bbl in 1H23, prompting the “central bank” of oil, OPEC+, to withdraw 1.66mn b/d from the market in a surprise move. With this novel approach, OPEC+ expects to (1) offset oil demand risks from the banking crisis (see Oil, banks and money) and (2) to discourage macro speculation against oil markets. Put differently, the group is determined to preserve the value of crude even in a recession, particularly against a backdrop of high inflation. And it does not want to wait for oil prices to drop below $50/bbl to make a supply cut decision, as it may have in the past. Bond traders have painfully learned to not fight the Fed. Now, OPEC+ is attempting to train oil traders not to fight its decisions… Net, we stay constructive and still see $88/bbl average Brent in 2023″