Market Briefing

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Daily Market Briefing

Saudi comments, oil market report support oil prices

Saudi Energy minister Khalid al-Falih said Sunday that the OPEC+ crude oil supply cut was unlikely to cease before June this year. The statement comes in a time where the US pipeline and export infrastructure is expanding leading to higher average export numbers. The production cut deal was to be reevaluated in the official OPEC meeting in April, but the reevaluation has allegedly been postponed to June. Probably this is leaving the April meeting as a non-event with regards to the Brent crude price if no disruptions to the oil supply appears. Falih said specifically: "We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward” and added "We will see where the market is by June and adjust appropriately". The likelihood of this actually being their strategy is rather high as their main cause is to “stabilize” and/or “rebalance” the oil market. False statements from a player like this would most likely spur some volatility to the markets which is unwanted from an OPEC point of view.

The upcoming OPEC+ meetings are so far scheduled to: 17-18 April and, 25-26 June.
Saudi Arabia is allegedly extra committed to a “rebalancing” of the oil market as they possibly are reducing March and April production, to less than 10 mbpd, and are furthermore planning on cutting exports. In November last year Saudi Arabia produced a record high of 11 mbpd.

Adding to the bullish sentiment is the International Energy Agency (IEA) yesterday releasing its 5-year outlook where it among other stated that the agency “continues to see no peak in oil demand…..key drivers of growth, particularly in the United States and Asia more than offsetting a slowdown in gasoline due to efficiency gains and electric cars…”. The IEA will release its monthly oil market outlook on Friday while OPEC will release its oil market report on Thursday.

During yesterday’s trade the Brent market came up slightly, but the ICE gasoil March contract came down quite a bit leaving the gas oil Mar/Apr time spread way lower than at the start of the day.