The strength that was seen last week has continued, with May Brent futures starting the week in the $84/bbl handles, representing a 2.3% increase week-on-week. At 10:30 (time of writing), the May contract softened to $83.81/bbl.
On Mar 03, OPEC+ members agreed to extend its voluntary oil output cuts of 2.2mpdd into Q2’24, falling in line with analyst expectations. This helped buoy prices into the start of this week. Saudi Arabia has notably decided to extend its voluntary cut of 1mbpd through to the end of June, leaving the nation’s output at around 9mbpd. Other news supporting oil prices was the Yemeni Houthis announcing that attacks on ships in the Red Sea will continue, as they said British-linked vessels would continue to be targeted.
The US Congress is discussing a deal that would prohibit Chinese companies from buying crude oil from the Strategic Petroleum Reserve (SPR). This is following the massive release of 180mbbls of crude oil from the SPR in 2022 to limit oil prices, during which 1mbbls was sold to Sinopec. However, the US now seems to be worried about not having enough supply as stocks decreased to a 40-year low in 2022. Coupled with an anti-Chinese sentiment being popular among Democrats and Republicans alike, this bill would be a ‘two birds, one stone’ opportunity.
The front and 6-month Brent futures spreads are at $0.97/bbl and $4.53/bbl respectively.
