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09.05.202311:10 विदेशी मुद्रा विश्लेषण और समीक्षा: Oil comes out of the shadows

Sometimes the answer to the question of why the price has risen is extremely simple: it was low. The three-day Brent rally following a three-week decline in North Sea oil prices is an example of this principle being realized. The oil market looked oversold. Neither macroeconomics nor fundamental indicators confirmed its serious collapse. Moreover, Vortexa data shows that the amount of oil stored on stationary tankers has fallen to its lowest levels since mid-February.

The main drivers for Brent's peak in recent weeks were investors' belief in a recession in the U.S. economy and distrust in Russia. The latter announced a 5% reduction in oil production. However, export data suggests that this could be false. In the end, misleading information could drive a wedge between Moscow and Riyadh, affecting OPEC+ efforts to stabilize the market.

Expectations of a downturn provoked by the most aggressive tightening of monetary policy by the Federal Reserve in decades have pulled Brent quotes into the abyss. Since 1974, the Federal Reserve,on average, began lowering rates five months after they peaked. Under current conditions, monetary expansion would be tantamount to a downturn and reduced demand for oil. Especially considering that in March, the U.S. became a net oil exporter for the second time in history since 1994.

Dynamics of the U.S. oil trade balance

Exchange Rates 09.05.2023 analysis

Oil shipments abroad increased by 24% to a record $27.6 billion, the fastest growth rate since 2017. At the same time, imports rose to $27.1 billion, the worst figure since November.

The demand for gasoline in the U.S., which usually grows in anticipation of summer, did not inspire optimism for oil fans either. Unfortunately, its dynamics lag behind the indicators of previous years. This fact is also considered negative for oil.

However, strong employment statistics in the U.S. have relieved the burden of responsibility on Brent bulls' shoulders. If the U.S. labor market is strong as a bull, what recession could we be talking about? Most likely, investors are confusing the desired reduction in the federal funds rate by the end of the year with reality. If there is no recession, China continues to recover from COVID-19, and the eurozone economy remains resilient, rumors of a slowdown in global demand for oil will be greatly exaggerated.

Exchange Rates 09.05.2023 analysis

As for supply, forest fires in Canada have displaced about 300,000 people and forced companies to shut down oil production by 200,000 bpd. Moreover, voluntary production cuts by some OPEC+ countries will begin in May, affecting the oil market balance.

Technically, on the daily chart, Brent's formation of reversal patterns such as Wolfe Wave and Double Bottom indicates that the worst for the North Sea grade is already behind. The successful test of resistances at $77.6 and $79.1 per barrel will be a reason for its purchases.

*यहां पर लिखा गया बाजार विश्लेषण आपकी जागरूकता बढ़ाने के लिए किया है, लेकिन व्यापार करने के लिए निर्देश देने के लिए नहीं |

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