Brent futures edge higher during a thin Easter trading session

Front-month ICE Brent has gained by $0.48/bbl on the day from Thursday, to $85.19/bbl at 09.00 GMT.

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Upward pressure:

After remaining closed on Friday, the Brent futures contract has opened slightly higher today amid lower-than-average trading volumes. Trading volumes are down today due to the Easter holiday around the world.

Commodity experts like ANZ and ING have estimated the oil supply shortage to exceed 2 million b/d this year due to OPEC+ output cuts coupled with a potential rise in global oil demand.

ANZ has forecast Brent to top $100/bbl in the third quarter this year and remain around that level through 2023. ING has also raised its Brent price forecast to $100/bbl in the second half of 2023 from $97/bbl earlier.

Downward pressure:

At least four customers in North Asia will receive full contract volumes of crude oil from Saudi Aramco in May, multiple sources have informed Reuters. This comes despite Saudi’s pledge to cut 500,000 b/d of output from May as part of the OPEC+'s agreement.

Oil market volatility has been exacerbated by OPEC's unexpected production cut as “bulls wait for seasonal demand to pick up and flip the market into a deficit,” SPI Asset Management’s managing partner, Stephen Hynes says in a note. However, the slow pace of China's demand recovery is weighing on investors' confidence, he adds.

“In addition, China has ample oil inventories at the moment, while Asian imports have been flat in Q1,” according to Hynes.

Refinitiv Oil Research estimates Asia's crude imports for March at nearly 27.60 million b/d, according to Reuters. This is a 6.1% drop from 29.4 million b/d imports in February and 29.13 million b/d in January, Reuters reports.

By Konica Bhatt

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