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Oil Futures Settle Lower On Demand WorriesDespite concerns about a potential recession, oil prices were still around $114 a barrel today as supply concerns outweighed concerns about a potential decline in demand. In the latest developments, workers in Norway went on strike, which is expected to cut the country's oil production by around 130,000 barrels a day. Despite the global economic recovery, oil prices are still up more than 50% this year as the conflict in Ukraine and the lack of supply from other producers such as Russia have raised concerns about the supply of oil. OPEC+ has also been struggling to boost its production due to various factors. In addition, the Federal Reserve's aggressive monetary policy has also triggered a sell-off in commodities. Investors are also closely monitoring the situation in China, where the country is still experiencing sporadic outbreaks of the virus.
TVC:UKOIL
by bbitar
The heat may be offINVESTMENT CONTEXT Inflation in Eurozone climbed from 8.1% in May to 8.6% in June, growing in 17 of 19 countries, with the notable exception of Germany (slide from 8.7% to 8.2%) and the Netherlands (from 10.2% to 9.9%). ECB officially scrapped its EUR 20bn/months bond-buying program on July 1 S&P 500 energy sub-index fell 17% in June, ranking as the worst-performing within the index While U.K. Prime Minister Boris Johnson and Chancellor Rishi Sunak announced “the single biggest tax cut in a decade”, estimated in of GBP 6bn (USD 7.4bn), France slashed its forecast for GDP growth in 2022 from 4% to 2.5% After lifting objections, Turkey said that it could still block Finland and Sweden’s accession to Nato in case if Nordic countries failed to meet the demand of Kurdish separatists extradition. Inflation in the country is still just a hair below 80%, as the Central Bank refuses to raise interest rates, leaving analysts to presume capital controls may be introduced to stop the bleeding On July 3, Russia announced its full control of Luhansk region in Eastern Ukraine, after seizing the city of Lycychansk, the last Ukrainian holdout in the area Digital asset brokerage Voyager Digital suspended trading, deposits, loyalty rewards and withdrawals on July 1, after sending a default notice to hedge fund Three Arrows Capital (3AC) U.S. markets closed on July 4 for Independence Day; European markets regularly open PROFONE'S TAKE Global equity markets recorded their worst half of a year since 1970, with S&P 500 and Nasdaq collapsing 21% and 30%, respectively. Deep risk-off sentiment still grips most areas of the market, fueled by growing inflation (8.6% in June after 8.1% in May in Eurozone; U.S. print expected in the coming days) and next steps of tightening monetary policy (in July, both the Fed and the ECB are expected to hike rates by 75 bps and 25-50 bps, respectively). The correction in energy and industrial metals prices was caused by mounting recession fears, while also a potentially better than forecasted harvest season in some parts of globe (U.S., Europe, Australia) could ease the pressure on consumer prices. Still, Profs don’t see the emergence of any major catalyst that could trigger a sustained reversal: for instance, on the macro front, there are no clear-cut signs of a ceasefire happening in Ukraine, thus leaving the threat of supply chain disruptions looming. PROFZERO'S TAKE As early as May 6, ProfZero placed global credit markets on particular watch, as much of the global pressures could be expected not only to raise the costs of business financing; but in more dire terms, to trigger defaults on weakest borrowers. On May 20, Sri Lanka defaulted for the first time in its history, as the economy was crushed by unsustainable fuel and food prices; at the time of writing, also the State of Laos faces fuel shortages and growing default risk. ProfZero is not particularly concerned by Russia's technical default, which has been clearly caused by the effect of sanctions; in contrast, what catches its attention is the state of financial health of several European countries, and chiefly Italy, who relied excessively on both low interest rates and the ECB role of buyer of last resort. Analysts have already dubbed ECB President Christine Lagarde messages on fragmentation as "vague" - and nothing irritates traders more than ambiguity, save, perhaps, short sellers, who indeed are piling up bear positions (Ray Dalio's Bridgewater has amassed some USD 10.5bn sell-side positions). Europe is the epicenter of this bear market - and ProfZero unfortunately sees scant chances for a quick turnaround ProfZero is also unfazed by the purported fall in commodity prices. While certainly the prices of cotton, wheat, copper and iron ore are are down even up to more than 30%, European natural gas is trading at EUR 155/MWh for 1-month deliveries - compared to EUR 22.11/MWh on July 4, 2021. Inflation is certainly receding from certain corners of the economy - but the European energy tangle remains far from being undone
by ProfZero
1
Brent & Natural Gas PricesBrent Crude is around $111.36, as investors grew concerned about a potential global recession and the tight supply of crude. Data from the Organization of the Petroleum Exporting OPEC Countries showed that its output fell by about 100,000 barrels per day in June. Libya's oil exports have dropped to between 365 and 409 thousand barrels per day, which is about 865 thousand barrels below the level that was normal. Also, a planned strike in Norway will reduce the country's oil production by about 130 thousand barrels per day. Despite the recent rise in oil prices, the market is still expected to remain weak in the coming months due to the global economy and the lack of supply. Natural gas prices in Europe started July at around 150, which is a level not seen since early March. The rising prices are expected to continue due to the tight supply of gas. A strike by workers in Norway this week is also expected to reduce the country's gas output by around 292,000 barrels per day. This could threaten the European Union's efforts to increase its storage capacity. Due to the reduction in Russian gas flows through the Nord Stream pipeline, Germany, which is the EU's largest economy, has enacted the second phase of its emergency gas plan. It involves increasing the monitoring of the market and the restart of coal-fired power plants.
TVC:UKOIL
by bbitar
#BRENTCRUDEOIL Still making higher lows within triangleIts no surprise anymore that OIL and energy stocks have been one of the only places to find some alpha this year. Even with oil taking a bit of a beating lately, looking at the technicals we are still in a very healthy shape for the time being with Brent Crude making higher lows within this triangle formation and well above its ascending 200 day moving averages. Until this breaks down, you have to give energy the benefit of the doubt to run higher this year..
TVC:UKOILLong
by MarcoOlevano
USOIL 30th JUNE 2022The Organization of the Petroleum Exporting Countries and allied producers are expected to confirm as a mere formality their decision to expand oil production by 650,000 barrels per day in July and August. The OPEC+ group of producers including Russia, began two days of meetings on Wednesday, though sources said there was little prospect of agreement to pump more oil. The net drop in crude oil inventories was flattered by SPR (Strategic Petroleum Reserve) releases, while the gasoline stock jump is because U.S. refineries are running at over 95% capacity
TVC:USOILShort
by DNP-FX
Crude oil analysis points to bullish turnaround Crude oil experienced a significant drop in price over the past two weeks. This week, however, it appears the energy commodity is bouncing back to the bullish side. The fall in the price of oil since May was triggered by the fear of a recession, in the US in particular, and numerous central banks’ moving against inflation with rate hikes, leading to slowing economic growth. This, however, has been mitigated by the fact that the global economy is now facing a lack of supply on the energy front. As global demand closes in on pre-pandemic levels there are indications of further support in demand for fuel. Supply concerns have cropped up as a result of Saudi Arabia and the UAE running at near oil production capacity and the political unrest occurring in both Ecuador and Libya. Given that these countries are some of the few that could fill the void left by the Russian sanctions, any hint of disruption may play a role in supporting or surging oil prices. On the other hand, US President Joe Biden last week called on Congress to suspend the Federal gasoline tax for 3 months. President Biden, in calling for gas tax holiday, further stated he wants merchants to pass on the entire reduction to consumers and the industry to refine more crude oil into gasoline to increase supply. On the technical side of Crude oil, after the conclusion of the OPEC meeting, we might see an increase in volatility in oil prices. On the daily chart, we can see a clear uptrend as the price bounces around its trend channel. Price made a rebound at around 104.0 on the lower trendline creating a bullish structure. As the price heads towards a minor resistance of 114.70, a break above this area could potentially send price towards 120.20 and possibly retest 124.9 before bouncing back around the upper channel for a possible price correction respecting the current trend indicator. One could also notice a bullish hidden divergence on the RSI as it creates a lower low while the candle stick chart creates a higher low on the daily time frame signaling for a potential turn to the upside. Any shift in fundamental factors, however, might negate this bullish indicator.
BLACKBULL:WTI
by BlackBull_Markets
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