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OPEC+ Likely to Extend Voluntary Cuts Beyond Q2: JPM

OIL

OPEC+ is likely to extend voluntary production cuts beyond Q2 with the fundamental oil view unchanged, according to JPMorgan.

  • The sell off due to Fed repricing this week is non-fundamental but is a strong signal of a Brent’s ceiling at $90/bbl as physical buyers stepped away.
  • Key indicators tracked by OPEC, such as curve backwardation, suggest relatively strong fundamentals but a large counter-seasonal inventory build in April is a concern.
  • OECD crude and product inventories are similar to April last year despite strong global demand growth and over 4mb/d of OPEC spare capacity.
  • The Brent forecast is unchanged at the high $80s/90/bbl through May and $85/bbl thereafter but with upside risks. Prices could rise into $90s/bbl in September with stock draws in May through August.

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