Overview: Saudi Arabia's Output Cuts Lift Brent's Wobbly Legs

Expectations that the market was looking at structural tightness are dissipating, the latest Energy Intelligence balances show. The outlook now calls for ongoing production cuts from Saudi Arabia into the fourth quarter to keep inventory draws going. Somewhat lower demand growth in the second half of 2023 and higher supply from Russia and the US — along perhaps with Iran and Nigeria where volumes are less clear — provide loser balances. Looking into 2024, the first half of the year would see inventory builds without ongoing production cuts. This prospect might be a key factor behind Brent’s reluctance to push all the way to $90 — the price goal of the Saudi output cut, traders say.