OPEC+ prepares to set production targets for Crude Oil for May
The blocking of the Suez Canal due to a stranded container ship is unlikely to have a strong impact on oil prices, in particular, due to reduced demand in Europe amid the third wave of the coronavirus pandemic. Markets are very concerned about the vaccination situation and inflation risks.
Oil prices are held in a range due to market expectations that OPEC+ will again take measures to curb supply next week and set production targets for May. The risk of a long-term increase in oil prices exists only if the ship's removal from the shoal takes several weeks, not days.
Along with European demand, Asian demand unexpectedly fell. Non-state Chinese refineries, which account for a fifth of imports, have sharply reduced purchases, preferring to refine oil. Following the Chinese, other Asian countries are reducing purchases, where traders are trying to clear the tanks of cheap oil that they bought during the period of ultra-low prices. This forces traders to sharply reduce the delivery prices for April and May shipments from Russia, Africa and the United States for the Asian market. If the price of Brent falls closer to $60 per barrel, then Chinese demand may return in June–July, by which time the season of repair work at the refinery will end, and stocks in storage will be empty.
In my forecast, I expect a further decline in the WTI oil price to the support level of $57.75 per barrel.