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BCOUSD Potential for Bullish Rise | 8th August 2022n the H4, with price touching the bond of descending trendline, and the DIF line is breaking the signal line in MACD , we are bullish bias that price will rise from our buy entry at 99.037, which is in line with the pullback support to our take profit at 102.467, where the pullback support and 38.2% fibonacci retracement are. Alternatively, the price may drop to the stop loss at 95.639, which is in line with the swing low. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
OANDA:BCOUSDLong
by FXCM
WTI Reverses OPEC+ Gains After Big Surprise Oil prices have roller-coastered higher and now lower this morning following OPEC+'s decision to hike output minimally, and also note they have limited capacity for further increases. WTI traded lower overnight after an unexpedctedldy large crude build was reported by API. “The announced increase from OPEC+ equates to a nonevent,” said Stacey Morris, head of energy research at VettaFi. “The amount is so modest that it is a rounding error for global oil markets,” she added, noting that the market remains “hypersensitive” to supply and demand dynamics and that “volatility around headlines is not going away.” The oil market has reversed those OPEC+ gains as investors once again focus on fears of a global economic slowdown as signaled by numerous PMI/ISM surveys in the last few days. API Crude +2.165mm (+467k exp) Cushing +653k Gasoline -204k Distillates -351k DOE Crude +4.47mm (+467k exp) Cushing +926k Gasoline +163k When the US sneezes, the world – including emerging markets and developing countries – catches a cold. So goes the dictum. But does it still hold? Reports argue the US slowdown and strong dollar might hit emerging markets harder this cycle. They are conflated with analyses of massive debt distress facing low-income countries, discussions about spillovers and volatile capital outflows hitting EMs and LICs and arguments that a Federal Reserve-driven global financial cycle warrants stepped-up foreign exchange intervention and capital controls.
OANDA:BCOUSDLong
by DaveBrascoFX
1
BCOUSD Potential Bullish RiseOn the H4, with price breaking the bearish channel and moving above ichimoku indicator, we have a bearish bias that price might rise from our buy entry at 108.398, which is in line with the overlap resistance to our take profit at 112.160, which is in line with pullback support. Alternatively, the price may drop to stop loss at 102.534, which is in line with overlap support and 50% fibonacci retracement. Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Everest Fortune Group’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Everest Fortune Group
OANDA:BCOUSDLong
by VantageMarkets
1
WTI BCO OIL RECOVERING AGAIN WEAKER US $U.S. shale production U.S. shale production is expected to rise by 143,000 barrels in July to 8.91 million barrels, according to the latest Drilling Productivity Report released on Monday. Shale producers are under high scrutiny this quarter as gasoline prices rise and inflation reaches a four-decade high. Washington is asking for a large number of production increases because gasoline prices are threatening to reach $ 6 per gallon. Oil and Natural Gas: Price recovery During the Asian trading session, the price of oil consolidated at around 121.00 dollars, and as the EU trading session started, the price started to bullish. The price of natural gas today is moving similarly to yesterday, without major oscillations, sideways. U.S. shale production is expected to rise by 143,000 barrels in July to 8.91 million barrels. Oil analysis chart During the Asian trading session, the price of oil consolidated at around 121.00 dollars, and as the EU trading session started, the price started to bullish. Fears of a recession and potential new constraints in China could weaken demand as limited supply remains in the market. Supply shortages have been exacerbated by falling exports from Libya amid a political crisis that has hit manufacturing and ports. Other OPEC + producers are struggling to meet their production quotas, and Russia is facing oil bans over Ukraine’s war. Analysts quoted Libyan oil minister Mohammed Auna as saying the country’s production had fallen to 100,000 barrels a day from 1.2 million barrels a day last year. The market will expect weekly data on U.S. oil inventories from the U.S. Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday to get indications of how limited crude oil and fuel inventories are. We need to continue today’s bullish consolidation and break prices above the $ 122.00 resistance for the bullish option. After that, the price could try to attack the $ 123.00 level. A price break above would intensify the bullish trend and further growth towards the $ 125.00 level. We need a negative consolidation and a pullback below the $ 120.00 level for the bearish option. After that, the oil price could retreat to $ 118.00 in the support zone on the lower trend line.
OANDA:WTICOUSDLong
by DaveBrascoFX
1
The Brink’s Co SetupBCO provides secure transportation, cash management, and other security related services in North America, Latin America, Europe, and internationally. The EPS growth (TTM vs Prior TTM) is 500% and there has been significant buying by CFO, James Domanico for a total of 130,327 share for a total market value of $5MM as recent as 7/12/22. We are around 2% above the 52 week low with high volume. Our support is around the $53.70, which I marked based on the significant volume spike on the 11th of may 2022. Based on this I would say we have a good risk to reward ratio of 2.0+ for a long position. According to 2 analysts from Thomson Reuters/Verus, the 12 month price target for BCO is the following: Mean- $92.50 or roughly 69% gain High- $96.00 Low- $89.00 #thedailyinvestor
NYSE:BCOLong
by thedailyinvestor
China Covid outbreak grows with millions under lockdownBEIJING: China on Saturday reported its highest number of coronavirus cases since May, with millions in lockdown this weekend as authorities persist with their zero-Covid policy. Using snap lockdowns, long quarantines and mass testing, China is the last major economy still pursuing the goal of eliminating outbreaks, even as the strategy takes a heavy toll on the economy. China reported 450 local infections on Saturday, up from 432 a day earlier. Most cases were asymptomatic. The rising wave of cases led to fresh restrictions this week in some parts of the country. Lanzhou, the capital of northwestern Gansu province, ordered its 4.4 million residents to stay home starting Wednesday, and a county in Anhui province went into lockdown from Friday. Beihai in the southern Guangxi region on Saturday also announced lockdowns in parts of two districts that are home to more than 800,000 people. China growth slumps on virus lockdowns, real estate woes: poll “Currently, the epidemic prevention and control situation in Beihai city is severe and complicated, and the risk of hidden transmission in the community is relatively high,” said a government notice announcing the restrictions. Earlier in the week, the steelmaking hub of Wugang in central Henan province announced a three-day lockdown over a single Covid case. The fast-spreading Omicron variant of the virus has been a major challenge for Chinese authorities, as they try to limit the economic damage caused by Covid restrictions. China logged its slowest second-quarter growth rate since the initial Covid outbreak, with GDP expanding just 0.4 percent on-year.
OANDA:BCOUSDShort
by DaveBrascoFX
1
REASONS TO TRADE OIL LONG( SHORT TO MID-Term)REASONS TO TRADE OIL LONG( SHORT TO MID-Term) Political Turmoil Could Plague Libya’s Oil Exports All Year Long Bashaga: It’s unlikely that Libya will descend into a full-blown civil war again. Without a unified government, Libya's oil exports will remain unstable in the short-to-midterm. As of the middle of last week, Libya was producing only about 100,000-150,000 bpd of crude oil. 1 While the oil market is looking for clues about losses of supply from Russia, the perennial wild card in crude production globally, Libya, has seen its output swing up and down again over the past weeks. The return of blockades on oilfields and export terminals amid renewed political rivalry is depriving the market of some of Libya’s oil production at a time of tight global supply. This market tightness is likely to tighten further when the EU embargo on seaborne Russian oil imports officially begins at the end of this year. Libya’s oil production, typically at around 1.2 million barrels per day (bpd) without blockades on oil infrastructure, has been lower in recent weeks since factions in the east renewed blockades on export facilities. The political rivalry also blurs the estimate of Libyan output and shipments with contradicting claims about how much production the country is losing during the protests at oilfields and oil ports. Currently, there is no immediate resolution to the renewed rivalry, which means there are unlikely to be elections this year. The political turmoil will continue to weigh on the Libyan oil sector, which is the key revenue source for the country. The distribution of revenues has been the bone of contention between the Tripoli-based and east-based institutions for years. Amid the political instability, Libyan oil production is also unstable, and shutdowns of exports could occur at any time, further tightening the global oil market, which is already tight on supply. It’s unlikely that Libya will descend into a full-blown civil war again, Fathi Bashaga, the Prime Minister appointed by the parliament earlier this year, told Bloomberg in an interview, but noted that chaos would continue without a unified government, with little chance that elections will be conducted yet this year. Bashaga was expected to be a candidate in the presidential election that was slated to be held last December but was called off. 2 Related: Ukraine Hits Oil, Gas Drilling Platforms Off Crimea, Russia Says Bashaga, backed by the east, told Bloomberg that people in the eastern part of Libya “are angry and unsatisfied with the state and as long as justice is not addressed and revenues are not distributed fairly, closures of oil will continue.” The blockade of Libyan oil production and export facilities could end once the central bank of Libya releases funds for the budget the east-based Parliament has approved, Bashaga told Reuters last week. Bashaga was appointed as Libyan prime minister by the parliament based in the east of the country in March. However, Prime Minister Abdul Hamid Dbeibah, who was appointed last year through a process backed by the United Nations, refuses to cede power. Bashaga is now based in Sirte in the east of Libya, while the rival prime minister is based in Tripoli. The renewed power struggle in Libya led in April to major shutdowns of oilfields and oil export terminals, which reopened briefly earlier this month, only to be closed again by protesters demanding a transfer of powers from Dbeibah, who has been refusing to step down for Bashaga. The blockades of oil ports have been mostly instigated by factions in the east, including such allied with eastern strongman Khalifa Haftar and the Libyan National Army (LNA) he leads. As of the middle of last week, Libya was producing only about 100,000-150,000 bpd of crude oil, oil minister Mohammed Aoun said. However, a western diplomat told the Financial Times that production was actually around 700,000 bpd, and while it fluctuates down by 30-40 percent these days, it’s not as low as the minister claims. “We are aware of the oil ministry claim that Libyan oil production dropped to 100,000 barrels per day,” a western diplomat told FT. “However, we believe that to be inaccurate; actual production is significantly higher.” The lack of official communication from the National Oil Corporation (NOC) about port and oilfield closures and blockades in recent days adds to the confusion about how much oil Libya really pumps. Whatever the actual figure is, the oil market shouldn’t rely on a stable 1.2-million-bpd production from Libya this year. 3 Iran Makes Major Concession To Revive Stalled Nuclear Negotiations In a significant concession aimed at reviving stalled negotiations with the United States, Iran has dropped its demand that the Iranian Revolutionary Guard Corps (IRGC) be removed from Washington's list of designated terror groups, Middle East Eye reports. Previously, Iran made the IRGC's removal from the list a precondition for restoring the multinational deal that limits Iran's nuclear energy program in exchange for sanctions relief. In May, it was reported that Biden decided not to budge on the IRGC designation. The Iran nuclear deal—officially, the Joint Comprehensive Plan of Action (JCPOA)—was signed during the Obama administration after lengthy and intense negotiations involving not only the United States and Iran but also China, France, Germany, Russia, and the United Kingdom. It imposed a host of additional restrictions on a nuclear energy program that was already operating under tight International Atomic Energy Agency supervision. Though Iran was complying with the deal, Donald Trump—caving to neocon foreign policy advisors and Israel-first mega-donor Sheldon Adelson—unilaterally withdrew the United States from the deal in May 2018. Progressing further along a neocon to-do list that also included moving the U.S. embassy from Tel Aviv to Jerusalem, Trump designated the IRGC as a terrorist organization in 2019. In a Hebrew-language tweet, then-Israeli prime minister Benjamin Netanyahu thanked Trump for "acceding to another one of my important requests." Lacking any specifics, Trump's designation centered on vague claims that Iran engaged in "malign" behavior in the Middle East and around the world. The IRGC is a major Iranian military organization that's independent from the country's regular army. Established in 1979 to safeguard the nascent Islamic republic, it has grown to become the country's dominant military entity—a force of some 125,000 complete with its own army, navy, air force and intelligence service. It also wields political and economic power. It was the first time a state military institution had been labeled as a terrorist organization. The move was opposed by officials in the CIA and Department of Defense, along with former Obama national security advisor and current secretary of state Antony Blinken. Given other sanctions already in place on Iran and the IRGC, the designation's actual financial impact was muted. In tit-for-tat fashion, Iran responded by designating the Pentagon's Central Command (CENTCOM) a terrorist organization and the U.S. government as a "supporter of terrorism." CENTCOM is responsible for military operations across a geographic swath stretching from Egypt through the Middle East to Kazakhstan and Pakistan. If there's a terror case to be made against the IRGC, there's one to be made against CENTCOM and the USA too—given CENTCOM's cooperation with al Qaeda in Yemen and the American government's arming of Salafist terror organizations in Syria, just for starters. On top of that hypocrisy, the U.S. government's application of terrorist designations has been impulsively disingenuous to the point that it saps the label of any meaning apart from the financial consequences. In practice, terror designations are just another means of bludgeoning countries that are out of favor with the U.S. government. Underscoring that reality, Democratic and Republican members of Congress recently urged Biden to designate Russia a state sponsor of terror in response to its invasion of Ukraine. “With the designation, the United States would be able to ban dual-use exports to Russia and take economic action against other countries that do business with Russia,” said congressman Ted Lieu. Then there's Cuba's whipsaw experience. Reagan declared Castro's government a state sponsor of terror in 1982. Then Obama decided he wanted to start normalizing relations and, suddenly one spring day in 2015, Cuba wasn't a terror sponsor anymore. Then Trump became president and, two weeks before the end of his term, Cuba was a terror sponsor all over again. However, the most devastating blow to the credibility of America's terror-state list comes from the countries that aren't on the list but should be—chief among them, Saudi Arabia, where Biden is set to visit in July, reportedly to further commit the U.S. to the kingdom's protection. Apart from Saudi Arabia's support of ISIS and other Salafist groups, recently-declassified FBI documents have added additional weight to accusations that Saudi embassy and consulate officials facilitated 9/11 hijackers' transition into American life ahead of their devastating attacks on New York and Washington.
OANDA:BCOUSDLong
by DaveBrascoFX
Oil prices to continue to rise?Last week's news headline, "OPEC sticks to production plan as high oil prices boost economy". We could almost say oil is a necessity in our daily lives. For transport, for heating in cold countries. Although we face high inflation, and a possible recession, would we expect oil to hit a point of demand destruction? At this point, I doubt so. So there is a real possibility of oil prices hitting the high again. Technical analysis wise, I am seeing a higher low into resistance. On 18-19 April, it printed a head and shoulders at resistance on the 4H chart before heading back down to re-test the dynamic support, or the upward trendline. Expecting price to consolidate for a while at this area.
OANDA:BCOUSDLong
by geneAnalytics
How Europe’s Push To Cut Off Russian Gas Is Impacting Steel MarkNatural gas and steel prices are closely intertwined. Sky-high energy costs fueled by Europe’s push to reduce its dependence on Russian gas are beginning to weigh on the steel industry. Steelmakers rely on natural gas for ironmaking in blast furnaces as well as for steelmaking in electric arc furnaces. Steel prices and gas are the primary topics of conversation today. It seems that steel traders in China are seeking more buyers abroad for their finished steel products. Meanwhile, Russia is mulling cutting gas supplies to the EU. Gas prices have an enormous impact on steel prices. China: Lockdowns at Home, Low Demand Abroad The news comes hot on the heels of reports detailing reduced consumption in Europe and ongoing COVID-19 lockdowns throughout China. Indeed, China’s latest anti-Coronavirus measures have resulted in a 2.9% industrial output drop year on year for April. At the same time, reports indicate that retail sales were off 11.1%. Steel price offers from Taiwan and South Korea were €860 ($910) per metric ton cfr Europe, also down from €1,080 ($1,140) cfr Europe from Southern and East Asia. As one trader told MetalMiner, “Energy costs are hitting people hard. There are more defaults on energy bills.” He added that “The whole world wants to sell to Europe.” However, with inflation hitting record highs and the war in Ukraine charging onward, the market is anything but ripe for the picking. Another trader pointed out that summer holidays in the Northern Hemisphere (normally in June, July, and August) will also mean lower building activity and lower demand. This is sure to put further downward pressure on steel. Russia: War, Sanctions, and Rubles Uncertainty about whether or not Russia could cut gas supplies to the EU over European Commission sanctions has created volatility in prices for that hydrocarbon. Steelmakers can rely on natural gas for ironmaking in blast furnaces as well as for steelmaking in electric arc furnaces. In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia. This accounted for around 45% of total imports and close to 40% of its total gas consumption. Another possible factor contributing to the ongoing volatility is the possibility that buyers might refuse to pay for Russian gas in rubles. In late March, Russian President Vladimir Putin issued an order demanding that “hostile countries” pay for their gas supply in their currency by opening accounts at Gazprombank. Indeed, Russia has already cut off gas supplies to Poland and Bulgaria over their refusal to comply with the demand. This immediately sparked concerns over what might happen if other countries followed suit. Related: Poland Says Norway Should Share Its “Gigantic” Oil & Gas Profits The European Commission, the executive body for the European Union, has since softened its stance against buyers of Russian gas opening accounts at Gazprombank. They even stated that buyers could make payments in dollars or euros. However, the organization said nothing about operators opening a second account in ruble-based payments, which several have reportedly done. The benchmark Dutch TTF price for the hydrocarbon commodity was €95.50 ($100) per megawatt hour on May 17, up 2.84% on the day from €92.86 ($97.93). The price achieved a high of €227.20 ($239.68) back in March. Steel Prices and Gas Still Closely Intertwined On April 29, the European Statistical Office reported that the month’s outlook for inflation was 7.5% year on year in the 19 states that have adopted the euro as their currency. The organization also noted that energy was likely to have the highest annual rate in that outlook at 38%. Of course, the EU has been trying to lessen its dependence on Russian oil and gas since the country invaded Ukraine in February. So far, their efforts include ramping up renewable energy products, lowering energy consumption, and diversifying sources. However, many industry watchers have difficulty believing that Europe will be able to achieve that goal. “How is Europe going to back off from Russian gas?” one analyst asked. “I simply can’t see how they’re going to get away from it.” A second source noted that it would be possible to reduce dependency on Russian gas by sourcing it from North Africa. Of course, this would require the construction of new infrastructure such as pipelines and terminals. He also said that whilst other countries have tried to diversify their gas supply, others like Germany have not. “It was comfortable for the Germans,” he said of the country’s gas transmission infrastructure. One option for some steel plants would be to use gas produced from coking ovens to help fire blast furnaces. However, results would be inconsistent, as not every steel plant is so equipped.
OANDA:BCOUSDShort
by DaveBrascoFX
Failure To Implement Russian Oil Ban Could Send Oil To 65$ Several E.U. member states made it plain that they will veto any E.U. proposal to ban Russian oil (or gas) imports. Removal of oil ban ‘fear factor’ may significantly reduce risk premium in crude oil prices. Lack of clear leadership from Germany makes an effective oil embargo a long shot. A key factor in the upper band of the benchmark crude oil trading ranges over the past weeks is market concern over a ban of Russian oil exports to the European Union (E.U.). Prior to the invasion of Ukraine, Europe was importing around 2.7 million barrels per day (bpd) of crude oil from Russia and another 1.5 million bpd of oil products, mostly diesel. This fear, though, is vastly overblown for several reasons analysed below. The removal of this particular fear factor in the oil price will allow oil prices to move back over the course of this year to the level they were before the Russia-Ukraine ‘war premium’ began to be priced in by the smart money in September 2021, which was around US$65 per barrel (pb) of Brent. The primary reason why a meaningful E.U. ban on Russian oil (or gas) will not occur is that it would require the unanimous backing of all of its 27 member countries. Even before the E.U.’s 27 member states met on 8 May to discuss pushing forward with the ban on Russian oil, Hungary and Slovakia had made it clear that they were not going to vote in favour of it. According to figures from the International Energy Agency (IEA), Hungary imported 70,000 bpd, or 58 percent, of its total oil imports in 2021 from Russia, while the figure for Slovakia was even higher, at 105,000 bpd, equating to 96 percent of all its oil imports last year. Other E.U. countries also heavily reliant on Russia’s Southern Druzhba pipeline running through Ukraine and Belarus have also made it clear that they are not willing to support the ban on Russian oil exports, the most vocal of which have been the Czech Republic (68,000 bpd, or 50 percent or its 2021 oil imports came from Russia) and Bulgaria (which is almost completely dependent on gas supplies from Russia’s state-owned oil giant Gapzrom, and its only refinery is owned by Russia’s state-owned oil giant, Lukoil, providing over 60 percent of its total fuel requirements). Other E.U. member states that are also especially dependent on Russian oil imports are Lithuania (185,000 bpd, or 83 percent of its 2021 total oil imports) and Finland (185,000 bpd, or 80 percent of its total oil imports). Even compromise proposals offered by the E.U. of allowing Hungary and Slovakia to continue to use Russian oil until the end of 2024 (and the Czech Republic until June 2024) were not enough to remove their opposition to the idea of the E.U. ban on Russian oil. In fact, the only real flurry of activity in terms of a concerted effort by any group within the E.U. since Russia invaded Ukraine on 24 February has been to ensure that Russia did not stop supplying its member states with either oil or gas due to their not being able to pay in the way Moscow preferred. This followed the 31 March decree signed by Russian President Vladimir Putin requiring E.U. buyers to pay in roubles for Russian gas via a new currency conversion mechanism or risk having supplies suspended. According to an official guidance document sent out to all 27 E.U. member states on 21 April by its executive branch, the European Commission (E.C.): “It appears possible ,… E.U. companies can ask their Russian counterparts to fulfill their contractual obligations in the same manner as before the adoption of the decree, i.e. by depositing the due amount in euros or dollars.” The E.C. added that existing E.U. sanctions against Russia do not prohibit engagement with Gazprom or Gazprombank, beyond the refinancing prohibitions relating to the bank. Not only have several E.U. member states made it plain that they will veto any E.U. proposal to ban Russian oil (or gas) imports – and recall that all 27 E.U. member states must vote in favour of such a ban for it to come into effect – but also its own executive branch, the E.C., has been busy sending out crib notes on how best to continue to pay for Russian oil and gas imports, effectively to bypass any wider sanctions on them, including those from the U.S. Added to this is the lack of ideological surety emanating from the E.U.’s de facto leader, Germany, on the subject of the ban on Russian oil. There can be little doubt that the E.C.’s handy directive of 21 April on how to skirt sanctions on paying for Russian oil imports received the tacit approval of those responsible for such matters in Germany, otherwise, simply, it would not have been drafted or sent out. Germany is also set to be hit hard itself by any ban on Russian oil in the first instance, and gas later on, being the recipient in 2021 of the most crude oil from Russia of any country in the E.U. – an average of 555,000 bpd, or 34 percent of its total oil imports in that year, according to the IEA. Comments from German Economics Minister, Robert Habeck, that Berlin was prepared for a ban on Russian energy imports were overlaid with considerable detail about how Germany has still not been able to find alternative long-term fuel supplies for the Russian oil that comes by pipeline to a refinery in Schwedt operated by Russia’s state-owned oil giant Rosneft. He concluded that fuel prices could rise and that an embargo “in a few months” would give Germany time to organise itself in this regard. The lack of clear leadership in the E.U. from Germany is not just another reason why there will be no meaningful E.U. ban on Russian oil (and gas) any time soon, if ever, but also opens up the probability that even if there were such a ban then it would have more holes in it than a fine Swiss cheese, just like the earlier bans and sanctions on Iran. As analysed in depth in my new book on the global oil markets, Germany was at the forefront in the E.U. of a range of measures designed to circumvent the mainly U.S.-led sanctions before 2011/2012. Shortly after the U.S. announcement of its unilateral withdrawal from the JCPOA deal in May 2018, the E.U. moved to impose its ‘Blocking Statute’ that made it illegal for E.U. companies to follow U.S. sanctions. At around the same time, Germany’s Foreign Minister, Sigmar Gabriel, warned: “We also have to tell the Americans that their behaviour on the Iran issue will drive us Europeans into a common position with Russia and China against the USA.” Shortly after that, Germany was a key mover in the E.U. introducing a special purpose vehicle – the ‘Instrument in Support of Trade Exchanges’ – that would act as a clearing house for payments made between Iran and E.U. companies doing work there. All of this rhetorical flim-flam by Germany and the E.U. has resulted in an oil price that remains way above where it should be, given the confluence of multiple bearish factors currently at play. On the supply side there remain definite pledges from the U.S. Energy Secretary, Jennifer Granholm, to engineer a “significant increase” in domestic energy supply by the end of the year, with the U.S. also working to identify at least three million bpd of new global oil supply. There remains the prospect of further strategic petroleum releases as and when required both from the U.S. and from member countries of the IEA, and of a new ‘nuclear deal’ with Iran as the U.S. is still open to the idea. Additionally, the U.S.’s ability to pressure OPEC into increasing production has been increased by its resuscitating the threat of the ‘NOPEC’ Bill. On the demand side, there remains further likely destruction from the COVID-related lockdowns across China, and no prospect of its ‘zero-COVID’ policy being meaningfully relaxed, and of a series of U.S. interest rate hikes stifling economic growth elsewhere. It is apposite to note at this point that even without these bearish factors in play, Brent crude was trading at around US$65 pb before the real Russia-Ukraine war premium was kicked in by the smart money in September 2021 when U.S. intelligence officers started to notice highly unusual Russian military movements on the Ukraine border after the conclusion of the joint Russia-Belarus military exercises that had taken place.
OANDA:BCOUSDShort
by DaveBrascoFX
China To Offload 2 Million Barrels of Iranian Crude Despite SancAfter easing up on Iranian oil somewhat in favor of heavily discounted Russian crude, China is now set to receive nearly two million barrels of Iranian oil, Reuters reports, citing Vortexa Analytics tanker tracking data. The cargo, set to unload in south China later this week for pumping into the government’s reserves, is the third large cargo to come from Iran since December. The cargo is reportedly on board a tanker owned by the National Iranian Tanker Company, which indicates it will be officially recorded as a Chinese purchase of Iranian crude. As Reuters notes, China does not officially register all of its crude imports from Iran, with some masked to appear as if they are coming from other suppliers, including Iraq and Oman. Reuters estimates that unofficial Iranian crude imports to China are around 7% of China’s total crude imports. According to the Wall Street Journal, Iranian oil exports rose to 870,000 bpd in the first three months of this year, which represents a 30% increase over total 2021 exports. Nor is China expected to be hit by secondary sanctions by the U.S. for dealing with Iran “because Washington has its plate full with Russia,” a Kpler analyst told the Journal. While Iran may be optimistic following Washington’s move yesterday to ease some sanctions on Venezuela, so far, there are no indications of progress in the nuclear deal with Iran. On Tuesday, Washington said a deal was “far from certain” and the onus was fully on Tehran, which continues to make demands for conditions that the United States will not agree to. Despite a lack of agreement, Iran appears to be preparing for some form of sanctions easing due to supply pressure as a result of sanctions on Russia. According to Seatrade Maritime, the NITC has recently announced new construction of crude oil tankers and repairs to its aging fleet in an apparent preparation for re-entering the legitimate global oil market.
OANDA:BCOUSDShort
by DaveBrascoFX
WTI bulls step in with price holding back above $100bblsThe West Texas Intermediate Crude Oil market has rallied a bit on Wednesday to break above the top of the candlestick from Tuesday. If you remember, the Tuesday candlestick was what I referred to as a potential “binary trade”, meaning that if we can break above it, the market could go higher. After all, the neutral candlestick suggests that we are in the midst of trying to figure out whether or not momentum will pick up. Now that we have broken decisively to the upside, the market looks very likely to continue going higher, perhaps reaching towards the $120 level. Given enough time, we could go all the way to the $130 level yet again. The market has been very bullish, but I do not want to see some type of parabolic move, because as you can see, we had recently had one of those, which of course fell apart quite drastically. There is only a certain amount of momentum that can come into a market without it falling apart, so the sustainability of the uptrend is what I am looking for. Looking at the chart, the 50-day EMA is sitting at the $96.55 level and climbing. As long as we can stay above this indicator, it does suggest that we are still in an uptrend. The size of the candlestick is rather impressive, so I think we will continue to see buyers on every short-term dip. The market has been very noisy but has also been decidedly positive. I have no scenario in which I am willing to short the oil market anytime soon, so looking at dips as potential buying opportunities will continue to be the way to approach the market. That being said, we will eventually run into “demand destruction”, but I do not think we are anywhere near that right now. Ultimately, this is a market that I think has quite a bit of upward mobility to it, especially as the war in Ukraine rages on. The lack of Russian oil on the open market is going to continue to cause issues, but inflation itself is reason enough to think that oil should continue to go higher. Regardless, this is a market that continues to offer plenty of opportunities for those willing to be patient enough to find value. Russian Foreign Minister Sergei Lavrov said the US gave written guarantees that Western sanctions against the country will not impact future trade with Iran, CNBC reported on 18 March. After hovering lower for two weeks, Brent briefly returned to above $120/bbl on 25 March on reports that Yemen’s Houthi rebels – backed by Iran – launched fresh attacks on Saudia Arabia. The attack hit Saudi Aramco’s oil depot in Jeddah and other facilities in Riyadh. WTI also rose to above $114/bbl on the day. The man who predicted crude oil $120 in 2020 when crude was at $30 alltime low The EIA raised the trading price of Crude oil by $22 per barrel to an average of $105.22 per barrel in its March Short-Term Energy Outlook (STEO), and the American benchmark West Texas Intermediate (WTI) to $101.17 per barrel. The higher price projection includes concerns about supply disruptions and additional sanctions as a result of Russia’s continued invasion of Ukraine. Brent is expected to fall to $88.98 per barrel post-2022, whereas WTI will fall to $84.98 per barrel. The EIA emphasized, however, that the price projection is ‘very unpredictable’, as actual price outcomes will be determined by the severity of Russia’s sanctions, any new potential sanctions, and the impact of individual business actions. In 2020, during the COVID outbreak, the event suddenly draws Crude & Brent oil prices. The crude oil (WTI) starts falling from $65/barrel to $19/barrel. The continuous fall frightens investors all over the globe. But, Ankit, Wealth Manager (USA), who is also an entrepreneur & investor at that time publicly said on his YouTube video that crude will touch($90-$100) soon due to macroeconomic conditions which central banks created by putting interest rates at an all-time low. Ankit said in 2020, due to this petrol prices will touch Rs.100 first time in India. In 2022, he seems indeed right. Today petrol prices all over India almost hit Rs.100 due to an international price hike in Brent oil. Today also his video is still available on his YouTube platform which he created by the name of ‘Market Maestroo’. This video he released on Dec.25 2020. One can check it as a fact as well. He is one of the only Wealth Managers in the Globe who predicted a rise in Crude oil & only economist in India who predicted Rs100/litre of petrol. Apart from this, his many predictions in recent times come true which also become the centre of attraction for many investors. He also predicted inflation is coming & USA inflation may touch 10%. Today Feb 2022, USA inflation is sitting at 30 year high of 8%. After such successful predictions, Ankit, Wealth Manager (USA), now started gaining popularity & limelight. One of his famous quote in investing is “Investing is done with a calm mind, not to calm your mind WTI oil outlook: Oil hits $130 per barrel on fears that Russian energy products WTI bulls move in as US and EU move towards sanctioning Russia further. US Strategic Petroleum Reserve (SPR) does little to cool down supply concerns. West Texas Intermediate (WTI) crude oil rose on Monday on persisting supply concerns as Russian energy sanctions are very much on the table following the Russian forces' civilian killings in north Ukraine. For a fresh high of the day, at $103.82. WTI spot is up by some 4.5% as White House's National Security Advisor, Jake Sullivan, announced that the US is working with European allies to coordinate further sanctions on Russia. Sullivan said that they have concluded Russia has committed war crimes, Bucha offers further evidence to support that, pointing to a protracted war. '' Ukraine-Russia conflict may not be just a few more weeks, could be months.'' Ukraine’s top prosecutor has said 410 bodies had been found in towns recaptured from retreating Russian forces around Kyiv as part of an investigation into possible war crimes. The weekend media reported mass killings of civilians in the town of Bucha which had been under Russian occupation until recently. The reports led to an array of calls from within the European Union for the bloc to go further in punishing Moscow. Consequently, a fifth package of sanctions against Russia is being arranged with the new round of measures expected to be approved later this week. Meanwhile and despite the release of 180-million barrels from the US Strategic Petroleum Reserve (SPR) and an agreement last week from members of the International Energy Agency (IEA) to release some of their own strategic reserves, oil is firmer due to the persistence of geopolitical concerns. "The global oil market remains in deep deficit of likely 1.5 mb/d over the last 4 weeks, before the loss of Russian supply even started, with global inventories at their lowest levels in recent history on a demand-adjusted basis and with limited OPEC and shale elasticity in months to come. Demand destruction requires higher prices, yet this dynamic is being nullified by increased government interventions in cutting gasoline taxes," Goldman Sachs said in a report. ''Indeed, while the SPR release can quell near-term tightness concerns, it does not solve the longer-term issues in the crude market. Structural deficit conditions could still persist down the road as these reserves will need to be replenished at a time when global spare capacity and inventory levels will still be stretched,'' analysts at TD Securities explained. ''In this sense, the right tail in energy markets is set to remain structurally fat as depleted reserves would add to the existing risks of self-sanctioning, stretched spare capacity across OPEC+, constrained shale production, an uncertain Iran deal and OECD inventories at their lowest since the Arab Spring. We expect this vast array of supply risks to remain the driving force in the energy market.''
FX_IDC:USDWTILong
by DaveBrascoFX
BCO soon again 120 AND OIL READY FOR 150 BEFORE TACKLING 220USDOil Could Rise to $120-150 Range in Next Few Months Oil price forecast April 2022 and beyond: Will prices test $140? Oil prices eased slightly on Friday, robust US data and weekend risk supporting prices, while US SPR releases as well as yet to be determined ones from other IEA members capped gains. A UN-brokered two-month ceasefire between Saudi Arabia and Yemen’s Houthi rebels has had no noticeable impact on prices today. The China holiday is definitely muting trading volumes in Asia today, leaving Brent crude unchanged at USD 104.50, and WTI unchanged at USD 99.35. With mainland China, Hong Kong and Taiwan all on holiday tomorrow, I expect the first part of the week in Asia to be quiet. Overall, I still expect Brent to trade in a choppy USD 100.00 to USD 120.00 range, with WTI bouncing around in a USD 95.00 to USD 115.00 a barrel range. The US SPR and monthly OPEC+ production hikes balanced out by geopolitical tensions elsewhere. Nearly five weeks after Russia’s invasion of Ukraine, there is no sign of the oil market's increased volatility abating anytime soon. Dollar Unlikely to Lose Dominance Due to Sanctions -- Market Talk 1435 GMT - Claims that the dollar could lose its dominance in the global economy due to western sanctions against Russia appear exaggerated, Capital Economics says. The sanctions imposed on Russia will accelerate the development of bilateral trading blocs that use alternative currencies but this won't rival the scale and reach of the dollar, Capital Economics says. The dollar remains the world's leading reserve currency but its role as the dominant currency for settling cross-border transactions is more important from the perspective of geopolitical influence, it says. "Foreign demand for dollar assets creates the deep and liquid markets that underpin the dollar's global dominance WEAK USDOLLAR IS POWER BOOSTER FOR THE OIL PRICE as many countries use the weak USD to buy more oil beacuase they are afraid of further sanctions and paying more for expencieve oil. If you knew that 12months from now one barrel oil willcost 300USD,wouldn´t itbe a nice situation to buy oil right cheaper as it cots now? Think Big. Oil prices shot up to $100/barrel (bbl) on the day Russia invaded Ukraine (24 February 2022) and continued to rise in the first week of the conflict. On 7 March, international benchmark Brent oil futures hit nearly $140 per barrel (bbl), while US oil futures West Texas Intermediate (WTI) reached $130/bbl. The prices spiked after the US and its European allies sought to ban the purchase of oil from the Russian Federation amid the conflict in Ukraine. Since then, Brent and WTI have retreated due to several factors, including concerns about demand as a fresh Covid-19 flare-up forced China – the world’s largest oil importer – to impose a large-scale lockdown. However, prices have remained above $100/bbl. Will oil prices hold at their current level of above $100 for the rest of this year? Dive into the impact of the ongoing Russia–Ukraine conflict and other factors on the oil price projections and read the latest on oil prices 2022 from analysts. Oil steadies as IEA prepares details of reserve release Oil prices have pulled back considerably since peaking last month in the early days of the invasion. Declines over the last couple of weeks have been aided by lockdowns in China and a massive SPR release by the IEA, the details of which should become known early this week. The US has already made its contribution known which will go some way to easing the tightness in the market and supply shock from Russia, where sanctions are biting. This is only a temporary solution but offers a buffer over the next six months as producers ramp up production, including OPEC+ which has until now refused to accelerate its efforts in any significant way. Oil prices remain high but they’re certainly at more sustainable and less economically threatening levels. WTI slipped below USD 100 and could remain there depending on the full details of the IEA release and the length of Chinese lockdowns but the war in Ukraine remains a significant upside risk. Gold holding up as recession signals flash Gold is holding up fairly well in the face of multiple super-sized rate hikes being priced into the markets and risk appetite remaining fairly strong. The inflation risk is seemingly providing plenty of support which is why we’re seeing so many rate hikes being priced into the markets, along with the downside economic risks that continue to mount. One thing that has come with these super-sized hikes is recession risks, as evident by the inversions we’re now seeing on the US yield curve. The 2-10 inversion is now clear for all to see and has previously been a fairly reliable recession indicator. Of course, it doesn’t offer any kind of specific timeline and there are doubts about its reliability in an enormous Fed balance sheet world. The economic data may also provide some comfort. But gold is holding firm and is actually up marginally on the day. It appears to have consolidated just above USD 1900 over the last few weeks with brief dips below being quickly bought into. Equally, it’s not making any real headway to the upside, making it quite a choppy market at the moment that offers little in the way of directional clues. Oil rose for a third day as support grows for a European Union ban on Russian crude. Expectations of a further escalation of the war is also helping to drive prices higher. Oil products price forecast update April 2022 Crude oil prices typically fluctuate based on seasonal demand and supply. Most recently, the COVID-19 pandemic caused crude price changes through a drop in demand. While economic recovery is underway, oil prices continue to be affected by global uncertainties. Key Takeaways The EIA forecast that Brent crude oil prices will average $82.87/b in 2022. WTI is forecast to average $79.35/b in 2022, up from $68.21/b in 2021 . Oil prices are rising due to an increase in demand and a decrease in supply. OPEC is gradually increasing oil production after limiting it due to a decreased demand for oil during the pandemic. Current Oil Prices There are two grades of crude oil used as benchmarks for other oil prices: the West Texas Intermediate (WTI) at Cushing and North Sea Brent. WTI at Cushing comes from the U.S. and is the benchmark for U.S. oil prices. North Sea Brent oil comes from Northwest Europe and is the benchmark for international oil prices. Internationally, Brent crude oil prices averaged nearly $75 per barrel (/b) in December 2021, down $6/b from November's average. Prices increased in January, up to $87/b, but they are expected to average $82.87/b in 2022, according to the U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook released on Feb. 8, 2022. West Texas Intermediate averaged $71.71 per barrel in December 2021, and rose to $79.39/b on Jan. 4, 2022.1 The EIA forecasts that WTI prices will average $79.35/b in 2022, up from $68.21 in 2021.2 Oil prices are affected by several factors that include everything from weather to economic and political instabilities. It also estimates that global oil and liquid fuels demand was 101.08 million b/d in December 2021. That's an increase of 5.52 million b/d from December 2020, but only 0.24 million b/d lower than December 2019. However, the EIA expects demand to average 100.52 million b/d in 2022.3 2021 Oil Prices Brent crude oil prices started low in 2021, averaging $54.77/b in January.4 But they rose in the second quarter, closing at $67.73/b in April 2021. West Texas Intermediate (WTI) at Cushing in the United States performed similarly, closing at $63.50/b in April. The third quarter saw massive hikes in prices, with Brent prices increasing to a height of $84.52/b in early November, and WTI reaching $85.64/b in late October. By the end of 2021 Brent sold at $77.24/b, and WTI at $75.33/b.56 Oil Price Forecast 2025 to 2050 The EIA predicts that by 2025 Brent crude oil's nominal price will rise to $66/b. By 2030, world demand is seen driving Brent prices to $89/b. By 2040, prices are projected to be $132/b. By then, the cheap oil sources will have been exhausted, making it more expensive to extract oil. By 2050, oil prices could be $185/b. WTI per barrel price is expected to rise to $64 per barrel by 2025, increasing to $86 by 2030, $128 by 2040, and $178 by 2050.7 The EIA assumes that demand for petroleum flattens out as utilities rely more on natural gas and renewable energy. It also assumes the economy grows around 1.9% annually, while energy consumption decreases by 0.4% a year.8 Future oil prices will depend greatly on innovations in energy, transportation, and other industries as societies work to become less fossil fuel dependent. Always understand.the oil companies shareholders want only one thing: HIGHER OIL PRICES! HIGHER PROFIS! Reasons for Today’s Volatile Oil Prices Oil prices used to have a predictable seasonal swing. They spiked in the spring as oil traders anticipated high demand for summer vacation driving. Once demand peaked, prices dropped in the fall and winter. Oil prices are more volatile today due to many factors, but four are the most influential. 1. US Oil Supply The coronavirus pandemic and natural events are still affecting oil demand and supply. The U.S. experienced a drop in production following Hurricane Ida in September as the storm shut at least nine refineries. The EIA estimates that U.S. crude oil production will average 11.8 million b/d in 2022 and 12.41 million b/d in 2023.9 2. Diminished OPEC Output Oil price increases also reflect supply limitations by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC partner countries. In 2020, OPEC cut oil production due to decreased demand during the pandemic. It gradually increased oil output through 2021 and into 2022. Supply chain disruptions in late 2021 affected global trade as well. At its most recent meeting in December 2021, OPEC stated it would continue to gradually adjust oil production upward by 0.4 million barrels per day (mb/d) in January 2022.10 3. Natural Gas Countries in Asia have relied on coal to generate power, but recent shortages have turned them to natural gas. Higher temperatures in parts of Asia and Europe have led to high demand for natural gas to generate power. COVID-19 has hampered Europe's natural gas production, and a colder-than-expected heating season in early 2021 reduced supplies further. As a result, natural gas prices soared in 2021 and are expected to remain high in 2022, and affected countries have turned to gas-to-oil switching to reduce power generation costs.2 4. Global Inventory Draw As a reduction in oil production continues globally, countries are forced to draw from their stored reserves (not including the strategic petroleum reserves). This steady draw of oil is contributing to the increase in prices, because inventories are decreasing. How Biden’s Huge Strategic Oil Release Could Backfire President Biden’s huge SPR release announcement has pushed WTI prices back below $100. SPR release may calm crude prices only in the short term. U.S. SPR may need to be replenished at higher oil prices. This week, the Biden administration revealed that it will release as much as 180 million barrels of crude oil in a bid to calm oil prices, which have remained above $100 per barrel for an extended period of time. The International Energy Agency, meanwhile, is coordinating a smaller but international reserve release of some 60 million barrels and has called an emergency meeting to discuss how exactly to go about it. It remains unclear whether part of the 180 SPR release in the United States will be a completely separate endeavor or if some of these barrels will be part of the IEA release. Earlier this year, the U.S. had agreed to release 30 million barrels as part of the IEA push. What is clear is that the success of these releases in calming down oil prices is quite unlikely. The United States last year announced the release of 50 million barrels in an effort to bring down prices t the pump, which were eroding Americans’ purchasing power and weighing on the President’s approval ratings. This pressured prices for a few days before they rebounded, driven by continued discipline among U.S. producers, equal discipline in OPEC+, and a relentless increase in demand for the commodity. Then Russia invaded Ukraine, and the U.S. banned imports of Russian crude and fuels. It also sanctioned the country’s financial system heavily, making paying for Russian crude and fuels too much of a headache for the dollar-based international industry. Prices soared again before retreating some, but remain firmly in three-digit territory. Related: Why We Cannot Just “Unplug” Our Current Energy System As of mid-March, the Department of Energy said, some 30 million barrels of crude from the strategic petroleum reserve had been sold or leased. That’s more than half of the 50 million barrels announced in November, and it appears to have had zero effect on price movements. But the new reserve release is a lot bigger, so it should make a difference, shouldn’t it? It amounts to some 1 million bpd over several months, per reports about White House plans in this respect. Unfortunately, but importantly, oil’s fundamentals have not changed much since November. U.S. shale oil producers, the companies that a few years ago prompted talk among analysts that OPEC was becoming increasingly irrelevant, have rearranged their priorities. They no longer strive for growth at all costs. Now they strive for happy shareholders. This has given more opportunities to smaller independent drillers with no shareholders to keep happy. Yet these have also run into challenges, mainly in the form of insufficient funding because the energy transition has had banks worrying about their reputations and their own shareholders. Pandemic-related supply disruptions have also affected the U.S. oil industry’s ability to expand output. Frac sand, cement, and equipment are among the things that have been reported to be in short supply in the shale patch. Now, there’s a shortage of steel tubing, too. Meanwhile, OPEC is doing business as usual, sticking to its commitment to add some 400,000 bpd to oil markets every month until its combined output recovers to pre-pandemic levels. Just this week, the cartel approved another monthly addition of 432,000 bpd to its combined output despite increasingly desperate calls from the U.S. and the IEA for more barrels. OPEC has been demonstrating increasingly bluntly that its interests and the interests of some of its biggest clients may not be in alignment right now. It has refused to openly condemn Russia for its actions in Ukraine and has not joined the Western sanction push. Related: U.S. Oil Demand Has Been Vastly Overestimated On the contrary, OPEC is gladly doing business with Russia. And Saudi Arabia and the UAE, the two OPEC members that actually have the capacity to boost production beyond their quotas, have deemed it unwise to undermine their partnership with Russia by acquiescing to the West’s request for more oil. In this environment, releasing whatever number of barrels from strategic reserves could only provide a very short relief at the pump. Then, it may make matters even worse. As one oil market commentator on Twitter said about the SPR release news, the White House will be selling these barrels at $100 and then may have to buy them at $150. Indeed, one thing that tends to get overlooked during turbulent times is that the strategic petroleum reserve of any country needs to be replenished. It’s not called strategic for laughs. And a 180-million-barrel reserve release will be quite a draw on the U.S. SPR, which currently stands at over 580 million barrels. If oil’s fundamentals remain the same, prices will not be lower when the time to replenish the SPR comes. This seems the most likely development. The EU, the UK, and the United States have stated sanctions against Russia will not be lifted even if Moscow strikes a peace deal with the Ukraine government. This means Russian oil will continue to be hard to come by for those dealing in dollars or euros. According to the IEA, the shortfall could be 3 million barrels daily, to be felt this quarter. OPEC+ is not straying from its course. In some good news, at least, U.S. oil production rose last week for the first time in more than two months, by a modest 100,000 bpd.
OANDA:BCOUSDLong
by DaveBrascoFX
Skyrocketing Oil Prices Spark Fears Of A Global RecessionBuyers in the West are shunning Russian oil, sparking fears of a potential supply shortage. Some experts are warning that pulling Russian oil off the market could result in a global economic downturn. "Every recession in the past 50 years has been preceded by an oil price spike, and it is déjà vu all over again.” The more Russian oil supply comes off the market in the coming months, the higher the chances of a global recession later this year, economists and analysts have started to warn since Russia invaded Ukraine a month ago. The latest warning came this week from two economists from the Research Department at the Federal Reserve Bank of Dallas. Should a large part of Russia's energy exports remain off the market throughout this year, a global economic downturn seems unavoidable, Lutz Kilian and Michael D. Plante wrote in an analysis on Tuesday. The analysis also warned that this slowdown could be more protracted than the 1991 recession following the oil supply shock from Iraq's invasion of Kuwait in 1990. This oil supply shock crisis is different from previous ones because it's not the result of a war in a major-oil producing country but rather the refusal of many banks to back transactions in Russian oil, Dallas Fed economists noted. Buyers, especially in the West, are shunning trade with Russian oil, tanker rates for Russian destinations shot up to record levels, also because of the war premium for vessels in the Black Sea. Then there is mounting public pressure on companies not to involve themselves with the Russian oil cargo trade anymore. Such was the case with supermajor Shell, which was slammed for buying a cargo from Russia and later apologized for this as it announced it would immediately stop all spot purchases of Russian crude and shut its service stations, aviation fuels, and lubricants operations in Russia. Oil tanker rates for Russian destinations rose to record levels, reflecting public pressure on oil companies to avoid purchasing Russian oil, fear of official sanctions on Russian energy exports at a later date and attacks on vessels in the Black Sea. This outcome was largely unanticipated, as U.S. and European Union sanctions originally deliberately excluded Russian energy exports," the Dallas Fed's economists wrote. There's a general consensus among analysts that soon, around 3 million barrels per day (bpd) of Russian oil may not make it to the market. "If the bulk of Russian energy exports is off the market for the remainder of 2022, a global economic downturn seems unavoidable. This slowdown could be more protracted than that in 1991," Kilian and Plante say. Since there isn't much that other oil producers can offer in terms of immediate supply, and the two countries with enough spare capacity—Saudi Arabia and the UAE—have so far signaled an unwillingness to fill the gap, a shortage of supply is to be expected. "Unless the Russian petroleum supply shortfall can be contained, it appears necessary for the price of oil to increase substantially and to remain elevated for a long period to eliminate the excess demand for oil," the economists at the Dallas Fed wrote. "This demand destruction is likely to be assisted by the recessionary effect of higher natural gas prices and other commodity prices, especially in Europe," they added. Last week, Moody's Analytics said in a report on the Fed's first interest rate hike since the end of 2018 that "Most of our probability of recession models suggest that the odds of a recession in the next 12 months have risen recently." "Russia's invasion of Ukraine could cause a recession. The principal channel through which it impedes the global economy is energy prices," Chris Lafakis, Director at Moody's Analytics, wrote. "Every recession in the past 50 years has been preceded by an oil price spike, and it is déjà vu all over again," Lafakis added. Still, analysts say that recession is not the most likely scenario, but the risks of such a slide in the global economy have risen considerably over the past month since Russia invaded Ukraine. Russia's war in Ukraine has reshaped the economic outlook, with lower global GDP expected now, but "the world economy has sufficient resilience to avert a recession," IHS Markit said in an analysis on Tuesday. Recession this year "is not the most likely scenario, but obviously the risks of recession have risen quite considerably," Moody's Analytics chief economist Mark Zandi told Fox Business' Maria Bartiromo on Tuesday. "I'd put the risk of recession now in the next 12 months, at least one in three. That's uncomfortably high," Zandi added, but noted that the most likely scenario is slowing growth, not outright recession.
OANDA:BCOUSDShort
by DaveBrascoFX
EIA: Oil Prices Will Remain Above $100 For MonthsOil prices will remain higher than $100 per barrel in the coming months, reflecting the geopolitical risk from Russia’s war in Ukraine and the tight energy markets with the current and potential future sanctions against Russia, the Energy Information Administration (EIA) said on Wednesday. Brent Crude prices are expected to average $105.22 per barrel this year, the EIA said in its latest Short-Term Energy Outlook (STEO) last week, significantly raising its February forecast of $82.87. In its March STEO last week, the EIA said it expects Brent Crude prices to average $117 a barrel in March, $116 for the second quarter of this year, and $102 per barrel in the second half of 2022. WTI Crude, the U.S. benchmark, is set to average $113 a barrel this month and $112 per barrel for the second quarter of 2022. Early on Wednesday, before the EIA inventory report, WTI was up 2% at over $98, and Brent was rising by 1.6% to $101.46. EIA’s oil price forecast, however, “is subject to heightened levels of uncertainty due to various factors, including Russia’s further invasion of Ukraine, government-issued limitations on energy imports from Russia, Russian petroleum production, and global crude oil demand,” the administration said. The current forecast Brent price also increased the forecast for the U.S. retail gasoline price, which the EIA expects to average $4.00/gal this month and continue rising to a forecast high of $4.12/gal in May before gradually falling through the rest of the year. The U.S. regular retail gasoline price is now seen to average $3.79/gal this year and $3.33/gal in 2023. If realized, the average 2022 retail gasoline price would be the highest average price since 2014, after adjusting for inflation, the EIA said. As of March 16, the national average gasoline price was $4.305/gal, according to AAA data. “This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices,” Andrew Gross, AAA spokesperson, said on Monda y. Saudi Arabia Considers Ditching The Dollar For Chinese Oil Sales The status of the U.S. dollar as the reserve currency of the world is largely based on its importance in energy and commodity markets. According to an exclusive report from the Wall Street Journal, Saudi Arabia and China are now discussing pricing some Saudi oil exports in Yuan. China is aggressively pushing to dethrone the dollar as the global reserve currency, and this latest development suggests the petrodollar is now being threatened. One of the core staples of the past 40 years, and an anchor propping up the dollar's reserve status, was a global financial system based on the petrodollar. This was a world in which oil producers would sell their product to the US (and the rest of the world) for dollars, which they would then recycle the proceeds of in dollar-denominated assets and, while investing in dollar-denominated markets, explicitly prop up the USD as the world reserve currency. All of this would support the standing of the US as the world's undisputed financial superpower. Those days are coming to an end. One day after we reported that the "UK is asking Saudis for more oil even as MBS invites Xi Jinping to Riyadh to strengthen ties", the WSJ is out with a blockbuster report, noting that "Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan," a move that could cripple not only the petrodollar’s dominance of the global petroleum market - something which Zoltan Pozsar predicted in his last note - and mark another shift by the world’s top crude exporter toward Asia, but also a move aimed squarely at the heart of the US financial system which has taken advantage of the dollar's reserve status by printing as many dollars as needed to fund government spending for the past decade. According to the report, the talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom. The Saudis are angry over the U.S.’s lack of support for their intervention in the Yemen civil war, and over the Biden administration’s attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year. China buys more than 25% of the oil that Saudi Arabia exports, and if priced in yuan, those sales would boost the standing of China’s currency, and set the Chinese currency on a path to becoming a global petroyuan reserve currency. As even the WSJ admits, a shift to a (petro)yuan system, "would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars" as the majority of global oil sales—around 80%—are done in dollars, and the Saudis have traded oil exclusively in dollars since 1974, in a deal with the Nixon administration that included security guarantees for the kingdom. It appears that the Saudis no longer care much about US "security guarantees" and instead are switching their allegiance to China. As a reminder, back in March 2018, China introduced yuan-priced oil contracts as part of its efforts to make its currency tradable across the world, but they haven’t made a dent in the dollar’s dominance of the oil market, largely because the USD remained the currency of choice for oil exporters. But, as Pozsar also noted recently, for China the use of dollars has become a hazard highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to its invasion of Ukraine.
OANDA:BCOUSDLong
by DaveBrascoFX
BRENT: SHORT TERM REVERSAL INSIDE DOWNWARD CHANNELSince August Brent has been in a downward trend, inside a channel. Both RSI and the channel itself show strong signs of reversal. This trade is quite a risky one since we will be trading against the trend. After the resistance has been hit, be wary of a strong reversal in continuation of the downward trend. A stop-loss around $36 will minimize losses in case of mass lock-downs across the world. With rising COVID cases across the world and looming economic shut downs, oil will remain under pressure for at least the remainder of 2020. ................................................................................................................................................................... If you like this analysis, please like, subscribe and comment. ...................................................................................................................................................................
OANDA:BCOUSDLong
by FieryTrading
1