Crude cartel cuts production
OPEC+ to tighten global oil supply
By Rob Roach, ATB Economics 4 April 2023 1 min read
An additional crude oil production cut of more than a million barrels per day unexpectedly announced by the Organization of Petroleum Exporting Countries and its allies (OPEC+) on Sunday pushed global oil futures higher yesterday.
The announcement is providing a short-term price boost with the West Texas Intermediate (WTI) benchmark rising above US$80 for the first time since January.
Keeping in mind the many other factors in play, if global economic conditions worsen, the change in OPEC+ policy will help prevent crude prices from slumping.
On the other hand, if global demand picks up as we get deeper into the year, the production cut could help WTI prices rise back toward US$90-100 per barrel and add fuel to global inflation and create more headaches for central bankers.
In March, concerns brought on by bank failures and persistent inflation helped push WTI down to a daily closing low of $66.74 on March 17, but the benchmark still posted a respectable monthly average of US$73.37.
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Today’s trivia question: Silicon Valley Bank’s collapse marked the second-largest bank failure in U.S. history. What was the largest?