By Alex Longley and Andres Guerra Luz
“Looking forward in the market, we’re seeing a significant backwardation, which signals that there is an anticipation of an easing of virus restrictions coming,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. “The market is looking toward more normal inventories heading into the summer, if we don’t see a flooding of markets.”
Oil is witnessing a stellar start to the year after Saudi Arabia’s deeper output cuts accelerated a rally triggered by Covid-19 vaccine breakthroughs. While there’s been a raft of calls by banks for oil prices to further rally, the market is facing a possible supply increase in April from OPEC+. The producer group meets next week to discuss its strategy with key members again differing on the path forward.
See also: Barclays Lifts Oil Price Forecasts on Subdued Supply Response
OPEC+ is “getting antsy now with prices being where they are,” said John Kilduff, a partner at Again Capital LLC. “They have a lot of spare capacity among themselves and the group, so it makes sense that they would want to respond.”
Shale explorers reported almost 6 million barrels of combined oil-output losses during the freeze last week. Occidental Petroleum Corp. and Pioneer Natural Resources Co., two of the largest producers in the Permian Basin, alone had a combined loss of about 3.8 million barrels, according to Bloomberg News calculations based on fourth-quarter earnings reports and calls.
|Other oil-market news:|