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Caps on russian oil is likely to come Insider: G-7 talks with India and China on oil price brake positive G-7 talks with India and China on a plan to cap the price of Russian oil have been positive, according to an insider. The two buyer nations have incentives to comply, a person familiar with the discussions says. A cap on the price has not yet been set, he said. However, it would have to be high enough for Russia to continue producing anyway. Currently, Russian oil sells at discounts of between $30 and $40 per barrel (159 liters) compared to market prices of up to $120 per barrel. Source: Welt Zeitung What impact would the price cap have on prices in Germany and the other G7 countries? In the ideal case, oil prices would fall; in the less good case, at least they would not rise any further. However, precise forecasts are difficult to make. The petroleum industry association Fuels und Energie already explained in the discussion about the EU oil embargo that market and price developments depend on many factors, including the dollar exchange rate and decisions by the major producing countries. Source: n-tv Opinion: I see the price cooling down slowly rather than continuing to climb, probably going towards 70$ in the next 6-10 months. To force russia to sell all its oil below market price, will make most countries of the world (which are not part of G7) to buy it off for a small price, leading to an overall relaxation of the oil market price. Also OPEC is ramping up efforts to increase output for the next months! This is not an investment advise! Do your own research! This is NOT a recommendation to buy or sell oil shares and this is NOT a recommendation to short or to long oil!
TVC:UKOILShort
by Lobotto
1
USOIL 27th JUNE 2022World crude oil prices tended to be bearish, continuing the correction a week earlier, amid the aggressive United States central bank in raising its benchmark interest rate. Oil prices have been rising since last year and hit a record high this year on March 8, 2022 when Russia invaded Ukraine. The weakening of oil prices is the uncertain demand prospect from China. Although the spike in Covid-19 cases has been contained, it is still unclear how quickly Chinese businesses will be able to recover. USOIL H1 USOIL D1 - JUNE
TVC:USOILShort
by DNP-FX
Oil and gas producers have come to a dead endLast Friday WTI crude NYMEX:CL1! dropped together with the broader equity markets and closed almost 7% lower at $107.99, slightly below the 50 days moving average. Earlier in the month the oil was still trying to break and stay above $120 however the hype cooled down quickly, partly due to the sharp 75 basis points rate hike by the Fed on Wednesday. This recent round of oil rally actually started in late Dec-2021 when the oil price tested the 250 days moving average, failed then reversed back to the upside. In late Jan-2022, the global inflation concern pushed the commodity across the major resistance at $86. And by late Feb-2022, fueled by the “special military operation” initiated by Russia against Ukraine, WTI crude went through the $100 handle and never looked back again. With the recent more affirmative backdrop of global recession, as well as the increasing political cost for the current government allowing inflation to worsen, last week's drop might officially mark the end of the 6 months long oil rally. There are 2 ways you can capitalize the idea. One is to short the commodity directly. Two is to short those who produce the commodity . In the following scenario analysis, we believe the second seems to be a more profitable way, even if oil price continue to rally. 1. Oil Price Up Although it’s unlikely, there are still factors on both the demand and supply side that might drive up oil price, such as extreme weather and military conflict. Another wild card is OPEC. But in any case, one thing for sure for the US government is that the oil companies are making a lot of money. The US president Joe Biden even directly pointed out “Exxon made more money than God last year” in a recent event in Los Angeles. With Britain recently announcing a 25% windfall tax on oil and gas producers, the white house is even more motivated to join “Robin Hood” to rob the rich (whether to give to the poor is another matter, lol). The windfall tax essentially is setting a profitability ceiling for oil companies. Even if the oil price goes higher, they will not be able to pocket more money. 2. Oil Price Down (Supply Side) This is likely to be a continuation of the windfall tax narrative. One option the producers can choose instead of paying more tax is to increase capex, i.e. increase oil production by drilling more crude, and expand refinery facilities. In fact, raising capex is the last thing the producers want to do given the global carbon zero commitment and the shift in consumer behavior such as shifting from traditional fossil fuel vehicles to EV. Hence if the oil companies at the end really compromised, their profit and distributable cash would definitely be harmed. 3. Oil Price Down (Demand Side) In the market economy we trust, even without government intervention, the market itself has an in-built feedback mechanism to neutralize any imbalance. When oil price is too high, demand will naturally be depressed (e.g. drive less, work from home more, take more public transport). Less demand in turn will pull down the price until demand-supply equilibrium is restored. If we look at the latest release of companies Q1 result, the economic slowdown is no longer a slogan but has already materialized. The demand downward spiral has actually taken place in the US, and it is only one trigger away to set this into motion for the oil market as well. For the oil producers, it means selling less oil at lower price, double whammy for their profitability. Now it should be clearer why no matter how the oil price moves from this point onward, oil companies have all reached a dead end. Trading Plan Instead of hand picking which producers to short, one can directly short oil & gas theme ETF, effectively shorting the whole bucket of companies in the sector to avoid tail risk from individual companies. I would recommend AMEX:XLE and AMEX:XOP for this operation, for their larger market cap and better liquidity. The best time to short was actually 2 weeks ago when oil price was still above $120 and there was a divergence between oil price and the major equity indexes. I placed my first short position in AMEX:XOP on Jun-10 at $161. Last week the drop was faster than I expected. In fact all the nearby resistances were taken down one by one without much consolidations: 20 days moving average: Jun-15 50 days moving average: Jun-16 Lower bound of bollinger bands from 20-days moving average: Jun-17 For those who are looking to raise their short exposure, I would recommend to wait until it rebounds back to one of the above resistance levels, place the short when the buying momentum dries and the selling force becomes dominant again . That translates to price levels around 140-155. For those who are looking to buy (Note: profit taking only, not buying in anticipation of new highs), the following levels are the major supports of this round of rally: May support: $123.5 Feb pre-war peak turned support: $115.2 250 days moving average: ~$110 Last note I want to share this week is, never rush into a trade. Any last minute rush means your preparation is inadequate. If you missed a trade it's not because you were not decisive enough to rush in, but because you did not do your homework. So stop overthinking about what you have missed, focus on the next, and make sure you win when you are right. I wish you all a happy and prosperous trading week ahead!
AMEX:XOPShort
by geoffreyip523
Brent: Knock, Knock!After it has knocked at the resistance line at $112.43 already twice, we expect Brent to rise above this mark and into the white zone between $113.88 and $123.14 to finish wave (2) in white. Afterwards, Brent should fall below the support lines at $104.67 and $97.56. There is a 28% chance, though, that Brent could soar through the white zone and climb above the resistance at $123.71 until the bottom of the pink zone between $133.80 and $137.40 first before moving downwards.
TVC:UKOIL
by MarketIntel
Rotation - After gyrationsINVESTMENT CONTEXT S&P 500 Energy Sector has registered 10-trading day decline dropping by 23.7% as fears of recession and lower demand pushed traders to liquidate longer-dated positions On June 23, all 33 of the U.S. biggest banks, some of which considered as systemically important, successfully passed the Fed's annual stress tests, confirming their ability to lend and maintain capital levels during severe economic breakdown During the summit in Brussel on June 23, Ukraine and Moldova formally received the symbolic status of "candidates" to join the European Union JPMorgan does not expect a recession to materialize over the next 12 month; according to the Bank, global growth will accelerate from 1.3% in the first half of 2022 to 3.1% in the second part of the year thanks to recovery of Chinese economy On a different note, Germany warned that Russia's move to curb natural gas deliveries to Europe could trigger an economic downfall similar to that caused by Lehman Brothers at the onset of the Great Financial Crisis Copper prices recorded 16-month low on June 23 because of growing worries about rising COVID-19 cases in China and stoking worries of a global economy recession PROFZERO'S TAKE As the world finally takes notice that there won't be a solution to the current industrial crisis unless a global strategy on energy emerges, ProfZero has witnessed the steep correction faced already by commodities just on fears of a recession. Brent crude has plunged to USD 110/boe after some bull analysts forecasted it could top its all time high at USD 147.50/boe (July 2008); iron and copper are down 30% and 17%, respectively, on a monthly basis, while also wheat prices retraced 25% from the all-time high touched on May 17. Albeit encouraging under an inflation perspective, these signs may be indicative of greater distress in commodities - hence more stringent need to quickly restructure global supply chains, particularly as soft commodities are exposed to extreme conditions (Italy drought) Growth stocks roared back on June 24, as traders unloaded Value and commodity-driven stocks repositioning in favor of the battered tech segments. ProfZero argues the move comes as investors reassess the likelihood of a recession, which would undoubtedly punish cyclical players, starting from big-ticket items (automotive, leisure operators) down to non-core consumer goods (non-food retail, handheld devices). As Growth trades still at record lows, it might be a good chance to start fishing for opportunities before the next cycle kicks-in - yet bearing in mind that within the next 2 weeks markets will still likely face volatility spikes due to June inflation reading in the U.S. (ProfZero does not expect a major slowdown yet from May's 8.6%) and Q2 earning season After Citi and Deutsche Bank located the probability of a recession in the U.S. at 50%, JP Morgan historical bull Marko Kolanovic reiterated his positive stance for a soft landing in the second half of the year, thanks to solid Chinese recovery and stabilizing geo-political conditions, including the conflict in Ukraine . As much as in May, ProfZero fails to share Mr. Kolanovic constructive tone. Although fully persuaded the war in Ukraine shall end, any tangible sign of relief for the world economy will take months to materialize. In China, President Xi has confirmed the country will achieve the 5.50% GDP growth target it set; yet, it remains to be seen then how the country will cope with its internal hurdles in real estate and rampant industrial overcapacity (steel)
by ProfZero
The oil goes overboard (2030-2040)Today's energy crisis is not a sign of strength of the oil companies, it is rather witness to the fact that the world economy has a very high productivity, still partly based on fossil fuels, but now moving towards properly renewable and alternative resources. I believe that the tops we will reach in the next few months will only accelerate the transformation into properly renewable energies. Oil demand will drop rapidly in the next decades, altough the demand will remain for some products (plastics, mechanics, etc.). This is not a trading recommendation, nor an advise to buy or sell anything.
TVC:UKOILShort
by Lobotto
It's the energy, babyINVESTMENT CONTEXT Inflation in the UK reached 9.1% in May, up a tad from 9.0% reading in April IEA warned the EU to brace for a potential full cut of energy supply from Russia, with outsized repercussions on the bloc's GDP Germany’s finance minister called the EU ban on sales of combustion engines cars by 2035 a “wrong decision” Goldman Sachs upped its latest forecast for probability of a recession over the next two years from 35% to 48%; ARK's CEO Cathie Wood identified in the Fed's excessively tightening monetary policy a cause that could plunge the economy into recession On June 21, ProShares launched its Short Bitcoin Strategy ETF (BITI), the first inverse exchange-traded fund linked to BTC, which allows investors to bet against the world's largest cryptocurrency by market cap Crypto exchange FTX extended a USD 250mln credit line to crypto lender BlockFi, shortly after bailing out crypto broker Voyager Digital with a USD 485mln loan PROFZERO'S TAKE All Profs timely highlighted the criticality of energy driving the next steps of the ECB monetary policy - other than hopefully accelerating replies from the industrial side, in an effort to ensure greater security and diversification of supply to the continent. Now those warnings are coming to the fore. The Central Bank of Spain estimates a full halt of energy supplies from Russia would plunge EU GDP by between 2.5% and 4.2%; Goldman Sachs locates the crunch at 2.2%, with sizable impacts in Germany (-3.4%) and Italy (-2.6%). Risk management predicates the "build back better" doctrine - when a major crisis strikes, opportunities arise for decision makers to rebuild infrastructures, making them more resilient. Profs really hope this time the EU won't turn a blind eye to the opportunity of pursuing for once a coordinated, integrated, energy strategy The escalating narrative between U.S. President Biden and the energy sector majors regarding lifting energy output is starting to look paradoxical to ProfZero. According to EIA, U.S. crude oil production was 17.44mboe/d in Q2 2020, at the trough of the pandemic (on April 20, 2020, WTI futures closed on negative territory at USD 37.65/boe below zero); it took 5 quarters for the industry to add 1.5mboe/d, setting production at 18.94mboe/d in Q3 2021, and yet 3 more quarters to add another 1mboe/d (output in Q2 2022 is estimated at 19.94mboe/d). U.S. production broke through 20mboe/d only once in history, on Q4 2019 - at the peak of the previous economic cycle. President Biden demand to hike internal output in a bout to put a lid on retail fuel prices looks therefore hazardous; it would heavily backtrack on the much-touted energy transition off from fossil fuels, while amassing capital investment in a sector that has been demonstrated to require entire quarters before its output may adjust. Even deeper into detail, U.S. refining capacity plummeted from all-time high in - guess when - Q2 2020 at 17.72mboe/d to 15.56mboe/d in Q1 2022, owing exactly to the energy transition kicking older plants off the industry, while leaving higher margins ("crack spreads") to those who stayed. As much as soft commodities, the move off from crude oil into natural gas has been taken for granted for too long. Policy makers were swift to point the finger to the bad guys; but too little was done to build the infrastructures of the energy of the future. A few more refinery runs won't make up for the problem PROFTHREE'S TAKE Out of the crude oil frying pan, into natural gas fire - mindful of coal burn. The Netherlands lifted limits on its three coal-fired power plants from 35% to full capacity until 2024; similar measures were undertaken by Austria, Germany and Italy as Russia goes all-out on natural gas curtailments. European Commission President Ursula von der Leyen urged Europe not to "backslide" its long-term commitment to cut fossil fuel usage, and to remain focused on "massive investments in renewables". ProfZero and ProfThree's eyebrows are as high as TTF gas prices - with but 4 months ahead of winter season, and the notorious impossibility for renewable energy to be stored, Profs are in fact fearing a much more worrisome backslide for the EU - one into full energy recession
CME:BTC1!
by ProfZero
Crude in retracementCrude oil prices are in clear retracement this week, in the midst of broad market down trending. Previous week's assessment was that Crude stalled, and the week passed saw Crude reach near target, almost 124, before stalling and retracing. For interest, white arrows show entry and exit points that were taken. Just days after closing the trade, Crude turned down for a retracement, and started with a weekly down candle that wiped out 5 weeks of gains. The daily chart shows that particularly after FOMC announcement of the 75 basis point increment, Crude took a definitive step back, and as the news sunk in, accentuated the slide downwards. Crude is in retracement mode, that appears to target 95 bounce support at the moment. The trajectory is broken, but the target for USD155-160 for 2022 is still in the making; IF Crude prices falls and maintains below 82, then it nullifies the USD155 projection. Weekly and Daily technical indicators are bearish for now. Look for 100 and 95 as supports over the next week.
NYMEX:CL1!
by Auguraltrader
ExxonMobil Shooting Star PatternThe weekly candles for the oil and gas company, ExxonMobil, look quite bearish. This could be the start of a major decline. There is a shooting star pattern forming on the weekly chart, while the oscillators are trending down and while the daily EMA exp ribbon and daily trend lines breaking down. Although anything can happen, it is looking like a major bearish reversal is occurring. It's sad that just last week all the "expert analysts" at CNBC were making strong bullish calls about energy stocks, citing "free cash flow" and numerous other reasons to buy them, all the while the charts are showing a topping pattern in energy and commodities. This is usually when tops form - when there is no bearish sentiment among anyone, and when strong hands are selling to weak hands. At least charts do not lie, and thanks to @TradingView anyone can access them alongside a plethora of crowd-sourced scripts and indicators.
NYSE:XOMShort
by SpyMasterTrades