Investec Risk Solutions


Weekly Oil Market Update


Tuesday, 6 May 2025
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Price Table

Source: Investec, Bloomberg
Commoditiy Price Weekly Change 50day-Ave 100day-Ave 200day-Ave
Brent ($/b) 61.89 -2.36 68.69 72.48 73.81
US WTI ($/b) 58.74 -1.68 65.20 68.97 70.39
ICE Gasoil ($/MT) 594.25 -20.75 642.88 676.57 679.45
Jet CIF NWE ($/MT) 637.90 -19.94 684.44 715.05 720.28

Over the weekend OPEC+ announced an increase in output for June. The increase relates to the 8 OPEC+ members who agreed to the additional voluntary cuts including Saudi Arabia, Russia and Iraq. In the December OPEC+ meeting they agreed a schedule of unwinds to those cuts where they would be phased out steadily from April 2025 to September 2026. At the start of April there was a decision to increase by an additional amount of output to be added in May, beyond the original schedule. Last week there were some stories that OPEC+ was going to add the same again for June, oil fell sharply on the news. This weekend, they met and agreed just that, to add about 550 kb/d onto the June target that was agreed in December. If you compare that to actual output according to the IEA though, it’s 275 kb/d above the new June target, because several of the 8 OPEC+ members are already producing far too much. If Saudi Arabia and a few others were to increase production to meet their new targets this would add another 463 kb/d of output.

In the OPEC press release it mentions that the market conditions are healthy, noting low inventories implying they think the market can take the extra barrels. Clearly the initial reaction of the market and the oil price is not so healthy though. Another explanation is that the Saudis are trying to punish those members who are overproducing, by increasing their own output and forcing prices down. We will need to see whether this strategy does make a difference to the actual monthly output numbers from those overproducing nations. The fear for the market is that Saudi Arabia continues to increase its output and beyond what the market can absorb.

Oil recovered from the initial drop yesterday and continues to strengthen so far today. Given the reports last week of the additional hike for June ahead of the OPEC+ meeting the confirmation of the hike perhaps was not such a surprise for the market. It was also reported that what and when the hikes would look like from here will depend on market conditions. Overall, there remain risks to both upside and downside. 60 \$/b remains a key level to the downside and below that the April low of 58.64 \$/b remains a key support. On the upside 66 \$/b is the area the market had been stabilising around over the last few weeks.

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