The oil market bows to the tactical strategy of the FED
Speculators and oil giants seized the moment to maximize their oil profits the past months. With a mixture of war fears, supply fears and the increased demand for crude oil after the Corone pandemic and bad supply chains, a broad panic wave had broken out.
Let's have a short overview about the current situation:
Europe's situation: With India and China importing massive amounts of oil from Russia at very favorable conditions, capacity is freed up on the world market. The new routes have now established themselves, an equilibrium in price and efficiency has now settled in. The same applies to LNG.
Global Supply Chains: They are healing, freight costs are falling, although demand for freight containers remains consistently high, as do increased kerosene prices. An equilibrium is more or less reached.
Wars and conflicts due to lack of food: The grain agreement for fertilizer and grain exports from Ukraine has improved the situation on the world market and avoided narratives for conflicts in poor countries that might lower down oil exports.
Summer session is over: As is known, midsummer is the time when most people in the world travel, especially now after the corona pandemic, many people left by car or plane for the first time since years. The season high is over.
The FED is just trying its best to lower the price below a tactical zone so that speculators are technically afraid to long oil markets. This is to mitigate a price-oil spiral. I expect we will see a 75bps interest hike this month as well to push oil prices below the MA trend lines. Oil prices will fall another good 20-40% in the coming months. There is no way the FED will allow it to pop back above 100$ for the next months, otherwise the mild recession might become a deeper one.
Disclaimer: The information mentioned in my post should be taken with a grain of salt. They are only my personal opinion and do not form facts. They are also not a call or recommendation to open trades, do trades or close positions.
Let's have a short overview about the current situation:
Europe's situation: With India and China importing massive amounts of oil from Russia at very favorable conditions, capacity is freed up on the world market. The new routes have now established themselves, an equilibrium in price and efficiency has now settled in. The same applies to LNG.
Global Supply Chains: They are healing, freight costs are falling, although demand for freight containers remains consistently high, as do increased kerosene prices. An equilibrium is more or less reached.
Wars and conflicts due to lack of food: The grain agreement for fertilizer and grain exports from Ukraine has improved the situation on the world market and avoided narratives for conflicts in poor countries that might lower down oil exports.
Summer session is over: As is known, midsummer is the time when most people in the world travel, especially now after the corona pandemic, many people left by car or plane for the first time since years. The season high is over.
The FED is just trying its best to lower the price below a tactical zone so that speculators are technically afraid to long oil markets. This is to mitigate a price-oil spiral. I expect we will see a 75bps interest hike this month as well to push oil prices below the MA trend lines. Oil prices will fall another good 20-40% in the coming months. There is no way the FED will allow it to pop back above 100$ for the next months, otherwise the mild recession might become a deeper one.
Disclaimer: The information mentioned in my post should be taken with a grain of salt. They are only my personal opinion and do not form facts. They are also not a call or recommendation to open trades, do trades or close positions.
Comment:
Oh, and a super important info: Iran might be able to export oil again without sanctions, if the agreement works out. This will shake up the world market and further weaken the current Saudi chaired OPEC, including the oil price..