Suncor Energy Inc. T.SU

OPEC+ Surprise Production Cut: 1.657 mm bpd

[MigraineCall]

Wow.... 

Even before tomorrow's OPEC+ meeting, they announce a big surprise voluntary cut, before trading resumes. 

Seems the window to buy cheap calls of your favorite producers may have just slammed shut.

Since markets are open Monday, my Sunday night is always my Saturday night. As a result, I'm about 10 beers deep into my Saturday night, so I'll just repost some comments I see on Twitter about it before heading to bed:


Another possible reason for a cut is that their production capacity has fallen & they couldn't make their quota even if they tried. It's better to look aggressive rather than impotent.

Summary of the voluntary cuts so far:
RUS: 500,000
SAUDI ARABIA: 500,000
IRQ: 211,000
UAE: 144,000
KWT: 128,000
KZT: 78,000
Oman: 40,000
Algeria: 48,000
Gabon: 8,000

Why the surprise #crudeoil production cut now?
1) anger directed towards recent non-fund driven spec selling
2) concerned +2m b/d 2023 demand growth, backloaded into 2H, may not be reached with markets pricing in a US recession
3) stalling US shale growth posing no threat

OPEC cutting 1mmbbls/day - my mind is blown. These moves typically telegraphed. This one wasn’t. Caught traders flat footed and lowest net long levels in years. Biden administration going to love this - NOT. Great reminder to never be complacent.

Consider, though, that when OPEC spare capacity is low, it means the group will be more likely to cut production to preserve that precious spare cap. Therefore, a "surprise" cut is in line with the low spare capacity thesis.

An interesting point is those cuts are during a period when demand seasonally rises in the Middle East....

[wreckhouse]

Another possible reason for a cut is that their production capacity has fallen & they couldn't make their quota even if they tried. It's better to look aggressive rather than impotent. Good one . We had a few down days this year of 4.50 a barrel so looking good for the coming season . No Keystone ,SPR is empty, interest is high, banks are failing and the commercial real estate is on

[Kman86]

I think it’s time the US get their head out of the sand and realize they don’t control anything when it comes to the oil market….the more games that get played, the more OPEC will jam it down everyone’s throats. I smell a short slaughtering on the horizon. The oil supply crunch is going to last many yesrs in my opinion and is just getting started. I'm not a fan of speculative investing as

[meritmat]

Yup I agree but like crypto and dope stocks before there money to be made as long as you get out before the bottom falls out.  Dismissing something because you don't agree with it could cost you a lot of money  Back in the day I had a friend that pleaded with me to invest in dope stocks......Nope not me I'm not a doper and I was not investing in something that was legal

[Experienced]

Yep... Early response is oil up 5.5% to around 80 for WTI and 84 for Brent.  Some people are talking 10% but we will see. The Brent price is the minimum that the Saudis need so there is likely a bit more potential upside but not a lot. As mentioned before, I bought some oils not long ago due to price inefficiences for a short term hold.  Will be looking closely at the action tomorrow