Investing.com — Wells Fargo analysts said in a note Thursday that the recent decision by OPEC+ to extend its production cuts through the end of 2024 is a positive sign for oil prices.

The move, in response to declining crude prices, indicates OPEC+’s continued commitment to maintaining tight global supply conditions and supporting higher oil prices.

Initially, OPEC+ had planned to unwind 2.2 million barrels per day of production cuts—around 2% of global supply—starting in October 2024 and continuing through September 2025.

However, recent global economic weakness and the resulting drop in oil prices prompted the group to delay the planned reduction.

“OPEC+ postponed upcoming changes to its production policies. Prior to this, OPEC+ was planning to unwind a portion of its standing production cuts beginning in October 2024,” Wells Fargo notes, suggesting this extension will help balance the impact of sluggish demand.

Wells Fargo remains optimistic about the near-term outlook for oil prices, citing the extension of the cuts as a stabilizing factor.

“We suspect that the extension of production cuts through year end should help offset recent global demand weakness.”

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 , with a potential $5 increase by the end of 2025 as the macroeconomic environment improves.

Looking ahead, Wells Fargo is closely monitoring the global supply situation, especially for 2025.

While OPEC+ has maintained production cuts for nearly two years to support prices, the analysts express some uncertainty over how long this support can continue.

“We do wonder how much longer it can maintain such support,” they caution, though they are not expecting any significant deviation from OPEC+’s strategy in the near future.

Overall, Wells Fargo believes the extension of OPEC+ production cuts is expected to provide stability to the oil market and support prices through 2024.