Crude prices have plunged this week as risk aversion escalates amid the widening banking crisis.
However, strategists at ANZ Bank expect the sell-off to be relatively short-lived, with fundamentals pointing to a tightening market.
OPEC to maintain its production cuts announced in late 2022
“For the moment, risks remain to the downside. We have subsequently trimmed our short-term (0-3M) target for Brent crude to $75/bbl.”
“We expect OPEC to keep the production cuts announced in late 2022 in place. Lower prices could also induce further demand, with the US to refill its strategic reserve.”
“As macro issues subside, we expect crude oil prices to push above $100/bbl in the second half of the year.”
Meanwhile,
On the Local scene the Organisation of Petroleum Exporting Countries (OPEC) yesterday confirmed that Nigeria produced 1.3 million barrels per day of crude oil in February, in alignment with the country’s earlier self-reported data this month.
The information which the international oil cartel made public in its Monthly Oil Market Report (MOMR), further cemented Nigeria’s leader as Africa’s topmost producer, outperforming Algeria and Angola.
But this is not discounting Nigeria’s underperformance to the tune of as much as much as 500,000 bpd, given its OPEC quota of 1.8 million bpd for the period under consideration.
OPEC , in the latest report also projected that world oil demand in 2023 will rise by 2.32 million bpd, or 2.3 per cent, unchanged from last month’s forecast.
However, oil weakened after the report was released, extending an earlier decline. Brent crude, Nigeria’s benchmark, was down over $1 to below $80 a barrel.
Overall, OPEC’s oil production rose in February despite output cuts by the wider OPEC+ group. OPEC stated that its crude oil output in February rose by 117,000 bpd to 28.92 million bpd, helped by a further recovery in Nigeria.
But despite the rise, OPEC is still pumping much less than called for by the OPEC+ agreement, as Nigeria, Angola and other members still struggle to reach their targets.