Energy leads ASX as oil majors gain on OPEC+ output cuts
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More news: Oil and gas majors gained on the ASX after the Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed to extend most of its deep oil production cuts well into 2025.
Energy was the best performing sector on the sharemarket, up 1.37% by 1:12pm AEST, as Beach Energy (1.49%), Woodside Energy (1.39%), Santos (1.18%), Ampol (1.09%), Karoon Energy (0.42%) and Viva Energy (0.29%) all made gains.
OPEC+ extends production cuts into 2025
The news: The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, has agreed to extend most of its deep oil production cuts well into 2025.
The numbers: OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand. Of this, 3.66 million bpd of cuts were due to expire at the end of 2024 and voluntary cuts by eight members of 2.2 million bpd were to expire at the end of June 2024.
On Sunday, OPEC+ agreed to prolong the cuts of 2.2 million bpd by three months until the end of September 2024, with these to gradually phase out over 12 months to September 2025. It will also extend the cuts of 3.66 million bpd by a year until the end of 2025.
The context: The decision comes as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival US production. Benchmark Brent crude oil prices have been trading near USD80 ($120.2) per barrel in recent days, below what many OPEC+ members need to balance their budgets.
Worries over slow demand growth in top oil importer China have weighed on prices alongside rising oil stocks in developed economies.
The International Energy Agency, which represents top global consumers, estimates that demand for OPEC+ oil plus stocks will average 41.9 million bpd in 2024, much lower than OPEC+ own forecast of 43.65 million bpd. The group will hold its next meeting on 1 December.
The sources: OPEC statement, Reuters
