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Oil markets are waiting for big cuts in OPEC
ronscarpa replied to yota691's topic in Iraq & Dinar Related News
Oil fluctuates between rising to $100 with the Taiwan crisis, and the possibility of falling again EconomyBreakingOil Prices 2023-04-09 at 12:57 Shafaq News / OPEC + announced a reduction in its daily production by 1.65 million barrels per day, to push oil prices up strongly and to produce many angry statements from the American side, which fears that this increase will affect the already high inflation rates in the United States. But the question is now, after the downward spiral has subsided, traders are looking at oil with a question: Will it continue to rise, taking advantage of the new geopolitical tensions between China and America due to the Taiwan Peninsula, or will prices gradually decline again? Major banks in America raised their oil price forecasts, including Wells Fargo and Goldman Sachs (NYSE:GS), immediately after the OPEC+ cut, yet many traders still believe that the tense economic outlook will prevent the group's actions from pushing prices higher. The dial indicators also started flashing warning signs. It may end up becoming the ultimate test of what matters most to the market: tightness in supplies, or a lackluster demand picture. This is likely to lead to more uncertainty about the direction of prices - a complex development for the Federal Reserve and the world's central bankers in their ongoing battle against inflation. "It's a very difficult market to trade at the moment," said Livia Gallarati, chief analyst at Energy Aspects. “If you are a trader, you are sandwiched between what is happening on a macro level and what is happening fundamentally. They are two different directions.” One thing is certain: a major shift in market control has now been cemented in the hands of Saudi Arabia and its allies, with massive ramifications for geopolitics and the global economy. Investors have continued to reward US drillers for production discipline, making it unlikely that shale companies will again undertake the kind of turbulent growth that helped keep energy inflation tame in the past decade. This leaves the oil market under the supervision of OPEC + at a time when some experts predicted that demand is heading to a record level. "The sudden OPEC cuts have already raised fears of a return to inflation," said Ryan Fitzmaurice, lead trader at commodity brokerage Marex Group Plc. "These renewed concerns about inflation should only increase" in the coming months, he added. Below we take a look at the most important things that traders will look at in the coming period. summer demand The timing of the OPEC decision struck an odd chord for many oil experts. The production cuts will not take effect until May, and much of the fallout is likely to be felt in the second half of the year. This is when oil demand usually reaches its seasonal peak, due in part to the busy summer driving season in the United States. It is also the point where China's economic reopening is expected to start swinging at full swing, which should further support demand. Normally, OPEC would like to take advantage of this sudden depreciation by selling into the market as much as possible. Instead, a cut means the cartel is backing off. This sparked debate about whether the move would eventually drive oil prices to $100 a barrel as demand soared, or whether the union and its allies were, instead, preparing for a summer slump of tepid consumption. "While the OPEC+ cuts surfaced are viewed as generally bullish, they also raise concerns about the demand outlook," said Warren Patterson, head of commodity strategy at ING. “If OPEC+ is confident of a strong demand outlook this year, will they really feel the need to cut supplies? Movements in global fuel markets underline demand uncertainties. While oil prices have risen, moves on refined products have been less pronounced, squeezing profit margins for refiners (TADAWUL:2030) across Europe and the United States. In Asia, diesel prices, a major refining product, point to growing fears of a slowdown as spreads narrow to their lowest levels since November. futures curve Talk of $100 oil has been hype since the end of last year, but the can seems to keep getting bigger. First, some analysts expected prices to get that far in the second quarter of 2023. Supply has been pushed into the second half of the year, and now even some of the biggest bulls don't expect the magic number to appear until 2024. The oil futures curve reflects that expectation. Contract prices linked to deliveries through December 2024 and 2025 have risen, even as the benchmark receipt-month futures contract has begun to decline. “The OPEC+ production cut certainly raises the possibility of $100 a barrel this year, although it is by no means certain,” said Harry Altham, analyst at brokerage StoneX. "Clearly, demand-side weakness stemming from growth considerations plays a more prominent role." https://shafaq.com/ar/اقتصـاد/النفط-يت-رجح-بين-الصعود-للـ100-دولار-مع-زمة-تايوان-واحتمال-الهبوط-من-جديد
