The Mar Brent futures contract has yet again strengthened throughout the day, reaching almost two-month highs of $81.51/bbl at 16:50 GMT and later retraced to trade at $81.47/bbl at 17:05 GMT (time of writing). WTI prices also found strong support and traded at $76.60/bbl at 17:00 GMT.
Brent potentially breaking out of the trading range seen for months is on the back of a very troubled geopolitical situation. For WTI, traders seem to see the $70.20/bbl mark as a breakout point, something that could spur more buying from commodity-trading algorithms (CTAs) who ‘hold substantial dry powder’ in the event of a breakout, according to TD Securities commodity strategist Daniel Ghali.
Chinese state-held oil and gas giant CNOOC increased its production and Capex targets to record-high levels. The company aims at increasing output to between 700mbbls and 720mbbls for 2024, compared to the 675mbbls produced in 2023. As for Capex, the Chinese player has a budget of between $17.6bn and $19bn, compared to $18bn in 2023. Major new projects in China as well as the Mero3 project in Brazil are expected to increase production.
Total fuel consumption in India, a proxy for oil demand, is forecast to increase to 238.95mt in the 2024-2025 fiscal year (FY), according to the petroleum ministry. This is compared to the estimate of 232.56mt for the 2023-2024 FY. The front and 6-month Brent futures spreads are at $0.45/bbl and $2.19/bbl respectively.
