22.12.2022 14:44

Optimism is more expensive than oil

Dear Clients and Partners!

Optimism is more expensive than oil Market expects a recovery in demand for fuel in Asia: the promises of the Chinese government raised the morale of exhausted speculators and black gold quotes crept up. But a serious upward breakthrough is not worth waiting for yet.Growth in prices is still hampered by weak macroeconomic statistics from China, as well as the latest data on oil reserves in the US. Thus, retail sales in China in November decreased by 5.9% (forecast -3.6%), and even the growth of industrial production by 2.2% does not compensate for this negative. The easing of quarantine measures has already turned into a new wave of infection for China, which slows down the recovery of business activity, but there will probably not be a return to hard quarantine.The restrained optimism of the IEA forecast (+130,000 b/d for the 4th quarter of 2022 and +100,000 b/d next year) is based on the idea of a decrease in production in Russia, and this is a very unreliable factor.It is assumed that oil production in Russia in 2023 will be reduced by 1.4 million b/d, which is why the market will form a new rally in Q2 2023. At the same time, the RF promises to completely stop oil supplies to countries that support non-market pricing mechanisms. So the real effect of the control of oil prices and additional embargoes on the world market cannot yet be assessed.After a political sell-off in an attempt to keep fuel prices down, U.S. SPR inventories fell to a 1984 low. Process of restoring strategic resources has already begun: 3 mln barrels must be purchased under fixed-price contracts no later than January 13, with deliveries scheduled for February. Volume for the world market is not critical, but even the fact of such a purchase is already perceived as a price growth factor.Bull market risk remains high, but the downside limit has probably already been reached. Large options are closed, and there are no fundamental negative factors, so the deals to sell are not relevant. We fix the profit and prepare for the holidays.Profits to yall!#ForexChief #oil #forexnews #IEA #worldnews #Market #stock

Sincerely yours,
ForexChief Team