The last week has seen a rapid rise in Brent futures from 2023 lows of 72.77 $/bbl to above 86 $/bbl. This follows an announcement from OPEC+ that they will begin to reduce production of crude oil in May, through until the end of the year. This is a further reduction in output, in addition to the cuts announced in October 2022. The Saudi Arabian government have said that this is a proactive move intended to stabilise the oil market, but it coincides with Saudi frustration with the US administration for not restocking its Strategic Petroleum Reserve.
The precipitous fall in TTF front-month prices across Dec – Feb has led to European gas prices reaching a parity with Brent futures: a parity which has not been seen since before the current gas crisis began. The combination of the decrease in gas prices and this recent uptick in crude oil prices could see oil to gas fuel switching in industrial processes. Alongside coal to gas switching in the European power sector, this additional gas demand should provide some support for global gas prices.