“bearish” OPEC meeting; downside risks to Brent $75-90 range By Investing.com

Goldman Sachs analysts recently pegged the OPEC+ meeting as bearish, citing plans to phase out further voluntary production cuts as a key factor.

Despite extending multiple levels of production cuts, including 2 mb/d of group cuts through 2025, 1.66 mb/d of voluntary cuts through 2025, and 2.2 mb/d of additional voluntary cuts through third quarter of 2024, Goldman Sachs considers the decision to undo these additional cuts problematic.

Eight OPEC+ countries have indicated a phasing out of additional voluntary cuts of 2.2 mb/d between the fourth quarter of 2024 and the third quarter of 2025.

Goldman Sachs notes: “While this monthly increase may be interrupted or reversed depending on market conditions, the communication of a surprisingly detailed implicit plan to roll back further cuts makes it more difficult to keep production low if the market proves more than bullish expectations of OPEC”. says the bank.

The decision reflects the willingness of several members to resume higher production levels due to large spare capacity. That surplus was a significant factor in Goldman Sachs’ above-consensus prediction of the output growth announcement.

Given the stock’s recent upside surprises, Goldman Sachs now views the risks to its $75-$90 range as tilted to the downside.

Analysts conclude: “Following the bearish encounter and given recent upside surprises in stocks relative to our expectations, we now see the risks to our $75-$90 range for Brent as tilted to the downside.”