The strength seen last week has continued, with May Brent futures starting the week in the $84/bbl handles, marking a 2.3% increase week-on-week.
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On 03 Mar, OPEC+ members agreed to extend its voluntary oil output cuts of 2.2mbbls/d into Q2’24, falling in line with analyst expectations. Saudi Arabia – a key component of the reduction – has vowed to extend its voluntary cut of 1mbbls/d through to the end of June, leaving the nation’s output at around 9mbbls/d. Moreover, according to Baker Hughes, the oil and gas rig count rose by three to reach 629 in the week to Mar 01, marking a second consecutive increase in rig count as players are looking to drill more, in line with the relatively higher oil prices.
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Looking ahead to this week, the market remains very balanced, in a somewhat equilibrium state. Despite chaining together five days of growth in regards to prices, the strength has been seen without a great deal of volatility, with prices last week all settling around the $83.50/bbl mark. Therefore, with the OPEC+ news already priced in, we forecast a rather neutral view, predicting prices to continue to print in the $83/bbl handles. It will be important to keep a keen eye on any macro headlines or shocks which could spark some life and meaningful direction into the contract.