Crude oil prices gained amid falling inventories and an uncertain economic backdrop, ANZ Bank said in a Friday note. Brent crude rose 0.3% to US$83.55 per barrel and West Texas Intermediate crude edged higher by 0.2% to US$79.38/b at last look early Friday.

Sentiment remained supported by a second consecutive weekly drop in US crude inventories and signs of slowing inflation, the bank noted. The oil market was largely range-bound as it contemplated the Organization of the Petroleum Exporting Countries’ next move.

The possibilities include an extension, unwinding or complete removal of 2.2 million barrels per day of voluntary output cuts, ANZ Bank said.

The bank’s current model is based on a gradual unwinding of the cuts in the second half of 2024. However, even with an unwinding, the market is expected to move into a deficit, with the future call on OPEC production well above current output.

As a result, ANZ Bank forecast a crude oil price of US$90/b in the second half. Should OPEC choose to remove the cuts, the bank’s fair value models suggest prices could fall as low as US$75/b. Meanwhile, an extension could result in significant deficits and push prices to US$100/b.

Fundamentals suggest that the market could handle higher output from OPEC and its allied producers in the second half, but the optics of ending the output cuts could lead to a heavy selloff in the futures market, ANZ Bank noted. Thus, an extension is the most likely outcome.

In its note, Commerzbank said the oil market has been trending slightly downwards, but prices are expected to recover in the months ahead, casting a shadow over the Organization of the Petroleum Exporting Countries’ June meeting,

The International Energy Agency’s downward revision of its 2024 global oil demand forecast had a negative impact on prices, but the oil market is already undersupplied starting this quarter, according to the agency. The U.S. Energy Information Administration also reported a significant weekly decline in US crude oil inventories.

Commerzbank believes OPEC and its allied producers are likely to find it difficult to reverse their voluntary output cuts, which were only supposed to last through the first half of the year, without risking a price drop.

However, maintaining the cuts also means the supply deficit will widen in the second half of the year as demand is expected to rise, the bank noted. This is the basis for Commerzbank’s expectations that oil prices will rise in the months ahead.

US stock draws and growing expectations that the US Fed may start cutting rates soon continue to support the oil market. However, while macro developments have been important for price direction and sentiment recently, OPEC+ output policy will become increasingly important ahead of the oil group members meeting at the start of next month.

In a note, ING commodity strategists believe that only a partial rollover is needed to ensure the market is balanced over the second half of 2024.

However, OPEC+ also needs to somehow manage market expectations, according to the note. “If consensus starts to move towards a full rollover of supply cuts, it becomes more difficult for OPEC+ to do anything other than a full rollover”.

The latest industrial output data from China shows that refiners reduced activity in April. Crude processed in the month fell by close to 3.5% year on year, to almost 14.4 million barrels per day.

Apparent domestic demand was also weaker, falling by close to 3% per year to a little more than 14.6 million barrels per day, according to analysts’ note.

In addition, stronger year-on-year crude oil imports coupled with lower refinery activity meant that crude oil stocks grew at a pace of a little over 800k b/d in April, ING stated.

US natural gas prices continue to recover, with front-month Henry Hub futures breaking above $2.50/MMBtu and trading to its highest level since January.

EIA storage data yesterday showed that natural gas inventories increased by 70bcf/d over the past week, less than the 77bcd/f expected, and below the 5-year average of 90bcf/d.

While total US storage is still comfortable at almost 31% more than the 5-year average, the gap is narrowing, falling from a little more than 33% last week, according to analysts’ note.

Professor Lord Mensah, a senior lecturer at the University of Ghana Business School (UGBS), has criticized the government’s handling of the economy.

The UG lecturer in his critique highlighted the Cedi’s recent struggles against the US dollar.

Prof. Mensah took to X formally known as Twitter on May 14, 2024, to express his concerns about the country’s economic trajectory.

He noted that the Cedi’s depreciation directly responds to underlying economic issues that the government has obscured.

“The Cedi is now responding to the hidden picture of our economic mismanagement. Too much hope in the dollar now. When you continue to lie about the economy, the exchange rate will expose you,” Prof. Mensah tweeted.

The Interbank forex rates from the Bank of Ghana as of May 15, 2024, showed that the Ghana Cedi was trading against the dollar at a buying price of 13.7161 and a selling price of 13.7299.

At a forex bureau in Accra, the dollar was being bought at a rate of 14.50 and sold at 14.85.

Against the Pound Sterling, the Cedi is trading at a buying price of 17.2590 and a selling price of 17.2777.

At a forex bureau in Accra, the pound sterling was being bought at a rate of 17.90 and sold at a rate of 18.50.

The Euro traded at a buying price of 14.8350 and a selling price of 14.8497.

At a forex bureau in Accra, the Euro went for a buying rate of 15.45 and sold at 15.95.

The Minister for Trade and Industry, Kobina Tahir Hammond, has ordered the Cement Manufacturing Development Committee (CMDC) to direct cement manufacturers in the country to “reverse immediately the increase in cement prices recently announced in the country.”

The Minister’s directive comes in response to the recent arbitrary increases in cement prices. He further requested the publication of the retail prices of cement by all manufacturers, a move aimed at halting the continuous price hikes.

In a bid to ensure uniform cement prices nationwide, the Minister reiterated his call for the CMDC to adopt a unified cement pricing mechanism. This mechanism is akin to the Unified Petroleum Pricing Fund (UPPF) adopted by the National Petroleum Authority for fuel retail in Ghana.

The CMDC, established under the Ghana Standards Authority (Manufacture of Cement) Regulations, 2023 (LI 2480), is chaired by the Director General of the Ghana Standards Authority (GSA), Prof Alex Dodoo.

The committee comprises representatives from various sectors including cement manufacturers, the Association of Ghana Industries, the Environmental Protection Agency, the Ghanaian Institution of Engineers, the Ministry of Trade and Industry, and the Ministry of Environment, Science, Technology and Innovation.

As the regulator for cement manufacture in the country, the CMDC is charged with promoting the “manufacture, wholesale and retail of cement and cement components.”

This latest directive from the Minister, is considered to be part of the government’s commitment to ensuring fair pricing in the cement industry.