Bearish Signals Remain for Brent and WTI Crude Oil Price / Commodities / Crude Oil
After the bearish progress, oil pricesslipped slightly as worries about the global growth outlook overtook fearsabout the supply shortage.
Macroeconomics
On the macroeconomic view, the greenbackfound support on its 50-Day Moving Average (DMA) at the beginning of the weekbefore resuming its rally upward and approaching its monthly highs of$110-110.50. Will the quarterly R3 pivot ($115) be reached anytime soon, orwill the $110.50 level be left as its two-decade high?
Regarding U.S. economic data, theinflation figures came out on Tuesday, and the Consumer Price Index (CPI)showed a slight deceleration from 8.5% in July to 8.3% in August, while thereading still appeared to have decelerated at a lower pace than expectations(as consensus forecast a drop to 8.1%). However, the Core CPI – anothermeasuring tool for inflation that does not take into account energy prices norvolatile food – showed an increase of 0.6% in August (double the 0.3% forecast)by reaching 6.3% year-on-year, versus 6.1% forecast and 5.9% in the previousmonth. Therefore, these above figures may provide cover for the US FederalReserve to deliver another hefty interest rate increase next week.
U.S. Dollar Currency Index (DXY), dailychart
FundamentalAnalysis
Repeated lockdowns in China are weighingon the growth of global oil demand, said on Wednesday the International EnergyAgency (IEA), after revising its forecasts for 2022 very slightly downwards,but anticipating a rebound for 2023. Overall, although slowed down, the growthof oil remains sustained, particularly because, for example, in the Middle Eastor the United States, it benefits from recourse to the detriment of natural gas,which has become very expensive.
Regarding Russia, its oil exports reached7.6 Mb/d (390,000 barrels per day less than before the war in Ukraine) inAugust, for export revenues estimated at 17.7 billion dollars (1.2 billionless).
Meanwhile, Russian oil giant Rosneftannounced Thursday a net profit up 13.1% in the first half of 2022 compared tothe same period the previous year, despite adverse external factors in themidst of the Russian offensive in Ukraine. Its Chief Executive, Igor IvanovichSechin, pointed out that the significant increase in the cost of logistics,rail transport tariffs of 18.6% since the beginning of the year, as well as therise in electricity costs and the unprecedented hike in the Russian centralbank's key rate (currently at 8%), negatively impacted on the results.
U.S.Crude Oil Inventories
On Wednesday, the Energy InformationAdministration (EIA) released the weekly change in the count of barrels ofcommercial crude oil held by US firms. During the week ended September 11, oilstocks were building an excess of 2.442M barrels, while analysts wereanticipating a number three times lower.
(Source: Investing.com)
Diplomacy& Geopolitics
Chinese President Xi Jinping is makinghis first trip abroad on September 15 and 16 since the start of the COVID-19crisis. In the current geopolitical context, his planned meeting with the headof the Kremlin should take on a strategic dimension at the summit of theShanghai Cooperation Organization (SCO). This economic and military structurewas founded in 2001 to ensure the security and stability of a large territory,including Russia, Central Asia, and China. It is the first time in three yearsthat the summit has been held in person, and this year it will bring togetherthe leaders of 15 countries, five fewer than the G20 and twice as many as theG7. In addition to China, India, Kazakhstan, Kyrgyzstan, Pakistan, Uzbekistan,Russia, and Tajikistan, which are the current member states, Iran, Belarus, andMongolia will participate as observing countries. Finally, Turkey, Azerbaijan,Armenia, and Turkmenistan will attend the event as states interested in theSCO, as the Russiandaily Moskovsky Komsomolets points out.
TechnicalAnalysis
On the daily chart, WTI crude oil(October contract) is falling back to its mean regression line (or median ofits regression channel), currently set at 77 periods on the daily chart to geta Pearson’s R (coefficient) above 0.87, that is to say, with a 4-monthcorrelation over 87% for WTI, 93% for RBOB Gasoline, and 90% for Brent (see thecharts below).
WTI Crude Oil (CLV22) Futures (Octobercontract, daily chart)
RBOB Gasoline (RBV22) Futures (Octobercontract, daily chart)
Brent Crude Oil (BRNV22) Futures (Octobercontract, daily chart) – Contract for Difference (CFD) UKOILThat’sall, fo
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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The information above represents analyses and opinions of SebastienBischeri, & Sunshine Profits' associates only. As such, it may prove wrongand be subject to change without notice. At the time of writing, we base ouropinions and analyses on facts and data sourced from respective essays andtheir authors. Although formed on top of careful research and reputablyaccurate sources, Sebastien Bischeri and his associates cannot guarantee thereported data's accuracy and thoroughness. The opinions published above neitherrecommend nor offer any securities transaction. Mr. Bischeri is not a RegisteredSecurities Advisor. By reading Sebastien Bischeri’s reports you fully agreethat he will not be held responsible or liable for any decisions you makeregarding any information provided in these reports. Investing, trading andspeculation in any financial markets may involve high risk of loss. SebastienBischeri, Sunshine Profits' employees, affiliates as well as their familymembers may have a short or long position in any securities, including thosementioned in any of the reports or essays, and may make additional purchasesand/or sales of those securities without notice.
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