OPEC+ extends production cuts - Apr 1

[dan_s]

This was expected, so it should not have a significant impact on oil prices.

MOSCOW. April 1 (Interfax) - Several OPEC+ countries including
Kazakhstan have confirmed the extension of additional voluntary oil
production cuts, as announced in early March.

These restrictions, initially enforced on January 1 for the first
quarter, will now remain effective until the end of June.

For the first quarter, numerous OPEC+ members declared their
commitment to further voluntarily curtail production by 1.7 million bpd,
with Russia pledging to reduce oil and petroleum product exports by 0.5
million bpd.

The decision to prolong restrictions into the second quarter was
justified by alliance participants to uphold stability and balance in the
global oil market. The lost production volumes will be gradually
reinstated depending on market conditions.

Saudi Arabia has extended its voluntary oil production cut of 1
million bpd, initiated in July 2023. Consequently, Saudi Arabia's oil
production will remain at 9 million bpd for precisely one year, marking
the Kingdom's lowest production level since 2011, excluding the pandemic
year of 2020. < This is the most significant part of the announcement. Saudi Arabia must have high oil prices and they are in control.

Russia, as part of additional restrictions, announced its intention
to not only decrease export supplies but also actively reduce production.
In the second quarter, the country aims to limit both its production and
exports by a total of 471,000 bpd for each month.

The UAE, Kuwait, Kazakhstan, Algeria, and Oman, among other OPEC+
members, also announced the continuation of their additional voluntary
restrictions: the UAE by 163,000 bpd, Kuwait by 135,000 bpd, Kazakhstan by
82,000 b/d, Algeria by 51,000 b/d, and Oman by 42,000 bpd. However, Iraq's
statement was notably absent, despite its commitment to reduce oil
production by 223,000 bpd in the first quarter.

Following the OPEC+ decision, the U.S. Department of Energy revised
its forecast for Brent oil prices upward for both 2024 and 2025 by $5 per
barrel. The forecast for 2024 has been adjusted from $82.42/barrel to
$87/barrel, while for 2025, it has been increased from $79.5/barrel to
$84.8/barrel.

Additionally, the International Energy Agency (IEA) anticipates OPEC+
countries will maintain their voluntary production curbs through 2024
unless stated otherwise, which is expected to shift the market from a
surplus to a slight deficit. The IEA highlighted that despite this,
significant volumes of oil in tankers are yet to reach their final
destinations, potentially offering some relief to the market.

[dan_s]

As mentioned in my March 30th podcast, I have raised my oil price assumptions that will be used in all of my future forecast/valuation models.
Here is what I'm going to use for WTI oil prices:
2024
Q1: $77.00
Q2: $82.50
Q3: $85.00
Q4: $85.00
2025: $85.00

For natural gas, Henry Hub prices did average close to $2.00 in Q1. I've lowered the next three quarters by $0.25 to $1.75, $2.25 & $2.50.
For now, I will keep 2025 at $2.50, but I think the ramp up in LNG export capacity should push gas prices firmly over $3.00 after this year.