Oil market to get “extremely tight” if OPEC continues supply cuts, Citadel reports

Priscila Azevedo Rocha and Jack Farchy, Bloomberg April 08, 2024

(Bloomberg) – Global oil markets are on track to be “extremely tight” in the second half, with prices rising to a level that will eventually constrain demand if OPEC doesn’t bring back more supply, said the head of commodities at hedge fund Citadel.

“It has really fallen back to OPEC,” Citadel’s Sebastian Barrack said at the FT Commodities Global Summit in Lausanne, Switzerland on Monday. The group has “definitely regained control.”

Crude futures topped $90 a bbl last week for the first time since October as a combination of robust consumption, output disruptions and geopolitical risks pushed prices higher. Similar supply-demand dynamics have also lifted other industrial commodity markets out of their slumber, with copper hitting a 14-month high.

Citadel, a multi-strategy firm founded by billionaire Ken Griffin, has grown in recent years to become the biggest hedge fund player in commodities. It managed around $59 billion of investment capital as of March 1, according to its website.

In gas markets, the rapid growth of U.S. liquefied natural gas (LNG) supply in the next two years will be increasingly important for global prices, Barrack said. Exports of the fuel connect the country with the rest of the world and will have an “incredible” impact on volatility both domestically and internationally, he said.

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