Wells Fargo analysts have expressed optimism about the recent decision by OPEC+ to extend its production cuts through the end of 2024, citing it as a positive signal for oil prices. The move, in response to declining crude prices, demonstrates OPEC+’s commitment to maintaining tight global supply conditions and supporting higher oil prices.
Initially, OPEC+ had planned to gradually unwind production cuts starting in October 2024, but the recent global economic weakness and the resulting drop in oil prices prompted them to delay this process. Wells Fargo believes the extension will help offset recent global demand weakness and stabilize the market.
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The bank maintains its price targets for 2024 at $80–$90 per barrel for West Texas Intermediate (WTI) crude and $85–$95 per barrel for Brent crude, with a potential $5 increase by the end of 2025 as the macroeconomic environment improves. However, they caution that they are closely monitoring the global supply situation, especially for 2025.
While optimistic about the short-term outlook, Wells Fargo acknowledges uncertainty about how long OPEC+ can maintain its support for oil prices. Despite this, they do not expect any significant deviation from OPEC+’s strategy in the near future.