Oil Near Three-Week High

Oil prices remained at three-week highs on Thursday after OPEC+ agreed to reduce global crude supply by 2M barrels per day, the highest reduction since 2020.

Brent crude futures fell 16 cents, or 0.24%, to $93.211 a barrel, after closing 1.7% higher in the previous session.

West Texas Intermediate (WTI) crude futures in the United States fell 14 cents, or 0.23%, to $87.621 after closing 1.4% higher on Wednesday. The deal, known as OPEC+, was reached between the Organization of Petroleum Exporting Countries (OPEC) and allies, including Russia, ahead of a European Union embargo on Russian oil and would restrict supplies in an already tight market.

According to Saudi Energy Minister Abdulaziz bin Salman, the supply drop would be between 1M and 1.1M BPD. Saudi Arabia’s part of the reduction is approximately 0.5M BPD.

Several OPEC+ countries have struggled to meet quota levels due to underinvestment and restrictions.

The administration of US President Joe Biden criticized the agreement as “shortsighted,” and the White House indicated Biden would continue to review whether to release additional strategic oil supplies to cut costs. Separately, Russian Deputy Prime Minister Alexander Novak suggested on Wednesday that Russia may reduce oil output to counter the effects of price limitations imposed by the West in response to Moscow’s activities in Ukraine.

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The Next Big Oil Demand Threat

Manufacturing growth in the United States dropped to its slowest rate since the recession recovery began in September, another evidence that the US economy is weakening under relentless Fed interest rate hikes.

Analysts believe that the United States will enter a recession if the current trend continues in the following months.

Still, most economists expect a light recession, or at the very least a brief one, with little influence on oil demand.

Global marine commerce growth is slowing, indicating that the global economic slowdown has begun and that a recession in major countries could occur shortly, threatening oil demand. Nonetheless, oil and commodity trading titans claim that oil demand is resilient.

Despite weakening economies, global oil demand remains resilient and is expected to keep up even if recessions occur, executives from some of the world’s major commodity trading firms said at a conference on Tuesday.

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Norway’s Oil Production Rising by 15% in 2023

Norway’s oil liquids production should increase by 15,3% in 2023, with the Johan Sverdrup field ramping up output by the end of this year, according to the government’s draft budget released Thursday.

In these difficult times, the Norwegian continental shelf must provide Europe with reliable and long-term oil and gas.

Meanwhile, natural gas output from Europe’s top provider should be 121B cubic meters next year, up from 122 bcm in 2022.

The Nordic country became Europe’s leading gas supplier after Russia clamped down on exports, while Johan Sverdrup crude helps push Russia’s Urals ahead of an EU ban.

Norway’s full-year oil liquids output – crude, condensate, and natural gas liquids (NGL) – should increase to 131M cubic meters (mcm) of oil equivalent or 2.261M barrels per day from 114 mcm in 2022.

Equinor’s Johan Sverdrup field in the North Sea will start production in the fourth quarter from Phase 2 development, adding about 220,000 barrels of oil equivalent per day.

Norway’s total oil liquids and natural gas production will reach 4.3M BPD next year.

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