Following OPEC+’s oil production cut timetable, released earlier this week, one senior portfolio manager says reactionary market sentiment is rooted in a “misinterpretation.”

Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, told BNN Bloomberg that selloffs in oil following the released OPEC+ plan is “completely unjustified using fundamentals.” 

“I think it’s rooted in a strong misunderstanding of what came out and what OPEC+ is trying to achieve,” he told BNN Bloomberg on Thursday.

“The concern seems to be that the eight members who are voluntarily curtailing volumes came out with a roadmap outlining that they would extend the cuts through the next quarter and then beginning in October slowly and gradually bring those back on,” he said.

Nuttall added that the financial market for oil is “30 to 50 times bigger than the physical market.”

Following OPEC+’s announcement, some analysts pointed to the stability stemming from long extension of the cuts while others expressed doubt about OPEC+’s capacity to maintain production increases amidst rival supply surges. 

“The misinterpretation is (that) there’s this rigid plan to bring on volumes, there’s concerns about a weakening economy in the United States, China, etc,” Nuttall said, adding that OPEC+’s roadmap is “not etched in stone.” 

“The cornerstone of OPEC policy has been to be proactive, pre-emptive and precautionary,” he explained. “Anyone who follows OPEC should have known that this is not a rigid plan; it’s subject to market conditions.”

He added that he views the OPEC+ plan “positively” because it signals that “they are more optimistic than the consensus now is on demand conditions.”

He mentioned that, starting next week, draws from global inventories should “meaningfully increase,” leading to an “inflection point for sentiment.”

“We were at peak euphoria two months ago, now we’re at peak pessimism,” he said.

“I think the draw is coming that is going to soon shift sentiment much more bullishly.”