Oil commentary - 5 March 2024

Morning all, Tuesday is here, and Spring is springing, apparently. Brent is trading this morning at $82.64 down 0.16 and WTi is trading down 0.28 at $78.46. First of all, I made a comment yesterday about the inevitability of Sheffield United playing Championship football next year. You know when you say something and then realise when you do that perhaps it was a bit, insensitive? (I would know nothing about that, ahem). Well, they lost 6-0 at home last night and pundits said "That was a disgrace, that half of football," and "It's probably one of the worst performances I've ever seen. I can't think of anything worse I've ever seen in a half of football than that.”. Ouch. Anywayyy, back to other disappointing results – this oil market. As I mentioned yesterday, on Sunday OPEC+ announced an extension of production cuts out until end Q2. This resulted in Brent futures closing 70 cents down on the day and as you can see above, we are trading lower this morning. Now, I also said yesterday that markets had already priced in said rolling over of cuts, so yesterday’s price reaction is not a surprise, however me just saying “yeah, nah, we knew that”, is hardly going to move the needle if you’re a trader, is it? So, allow me to hand over to my colleagues, who wrote a report yesterday that explains things in a teeny bit more detail “Oil prices have shown ongoing strength throughout February, maintaining an average of $81.5/bbl for ICE Brent, a mere $1/bbl variance from our projected figures. The OPEC+ alliance remains resolute in its commitment to significantly tighten the market by the summer months…. the latest announcement introduces a novel aspect with Russia's commitment to curtail oil output, rather than solely focusing on exports. This development possesses the potential to further constrict oil markets beyond our previous estimations, consequently influencing our price forecast for the second quarter, particularly as barrels traded during that period will be destined for summer refining.” See, that’s exactly what I said!!! Coughs. Awkwardly. Commentary returns next Monday 11th March, live and direct from Singapore. Good day, and rest of the week to all.