In an oil and fuel report despatched to Rigzone late Tuesday, Macquarie strategists stated they anticipate Brent “to grind greater till $90, or till we attain June”.
“We anticipate costs to be supported by geopolitical stress, which has shifted again to Russia-Ukraine, in addition to a wholesome debate on world balances, as soon as once more led by a large variance on 12 months on 12 months U.S. manufacturing development,” the strategists stated within the report.
“If Brent reaches $90, we consider many of the upside can be factored into oil and the remaining unpriced basic components, largely provide development associated, will largely be bearish,” they added.
Within the report, the strategists famous that, final week, “crude broke by way of its current $10 vary, partially pushed by the tightening of Russian sanctions and extra drone strikes on Russian refineries”.
“Worth help was additionally supplied by enhancing Chinese language macro information which can recommend a possible enchancment in secondary sector efficiency,” they added.
“As we enter into the height of worldwide turnarounds, we anticipate softer construction and grades earlier than the final leg of the rally strikes ahead, attributable to world oil inventory builds,” they continued.
The strategists highlighted within the report that each WTI and Brent speculative web size rose over the earlier week.
“WTI web size improv[ed]… by 51.8K whereas Brent elevated by 53.2K, combining for 105K contracts,” they stated within the report.
“Notably, WTI + Brent Managed Cash elevated by 109K representing the biggest mixed transfer since April 2023, which adopted the shock OPEC announcement of an extra 1.16 million barrels per day of voluntary cuts,” they added.
“WTI spec web size noticed an uptick pushed by over 17 occasions new lengthy curiosity than added shorts. Brent’s transfer was bigger with new size nearly 9 occasions the quantity of coated shorts,” they continued.
“Lastly, business participant circulation decreased over the week by 72.0K contracts with Brent demonstrating the biggest drop in business size since mid-October final 12 months,” they went on to state.
Brent Continues Consolidation Above $85
In a separate report despatched to Rigzone on Tuesday, analysts at Commonplace Chartered highlighted that Brent crude oil costs had “continued their consolidation above $85 per barrel”.
“The front-month contract has settled above $85 per barrel on the previous eight buying and selling days and the whole buying and selling vary has been above $85 per barrel for the previous six days,” they stated within the report.
“The 12 months up to now rise in crude oil costs stands at near $10 per barrel, with the whole ahead curve now greater 12 months on 12 months. We predict the curve has additional to rise, notably on the again the place we predict the present $70 per barrel for the five-years out worth is no less than $20 per barrel too low,” they added.
“On the entrance of the curve, we anticipate Brent to maneuver above $90 per barrel early in Q2, with our Q2 Brent common forecast unchanged at $94 per barrel,” they continued.
Within the report, the Commonplace Chartered analysts revealed that they anticipate tightening fundamentals to be “the principle driver of the push above $90 per barrel, with Q1’s a million barrels per day world stock draw persevering with by way of Q2”.
“Inside Q2, whereas April is broadly balanced, we forecast attracts of 1.55 million barrels per day in Might and 1.56 million barrels per day in June,” they stated.
“We predict demand outperformance will play a key function in enhancing oil market sentiment; we anticipate a brand new all-time world oil demand excessive of 103.01 million barrels per day in Might; a document which we anticipate to be damaged in each June (103.62 million barrels per day) and August (104.31 million barrels per day),” they continued.
Additionally within the report, the Commonplace Chartered analysts famous that, in current “consumer conversations”, they’ve “obtained the impression that macro-led gloom amongst traders that dominated sentiment at first of the 12 months is now lifting, and there additionally appears to be a extra downbeat (and we predict extra reasonable) view of U.S. oil provide development amongst traders”.
“Cash-manager positioning additionally suggests {that a} vital enchancment in sentiment is already below manner,” the analysts stated within the report, including that their money-manager crude oil positioning index stands at a four-year excessive of +33.5, “with the indices for all the principle oil contracts all constructive for the primary time in six months”.
To contact the writer, e-mail andreas.exarheas@rigzone.com