
The G20 summit took place in Bali, Indonesia, on November 2022…
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As 2019 opened, WTI oil was at $50 per barrel. Through that entire year, it was oscillating between this support and the resistance of $65. That’s exactly where it was when the virus stroke and the global oil demand plunged. WTI oil price did the same: it dropped from $65 to zero. $35 is the level which marked a definite start of recovery as it eventually proved to be tactical resistance. Closer to the year-end of 2020, the price moved into the channel $45-50 – that same channel that used to support the WTI oil price since March 2017. What’s the projection for 2021 then, will it repeat 2017-2019 and manage to get to $65?
As the new Joe Biden takes over from Donald Trump as the newly elected US President, some changes in American international affairs are expected. Joe Biden is believed to try to get back Iran to the nuclear deal. If that’s the case, Iran will likely see the sanctions over it lifted. If that happens, Iranian oil will get back to the market – and Iran already announced that it’s planning to double its oil production in 2021. If the chain of events completes the sequence to let Iran have back its access to the global market, that will press on the oil price downwards and cause some trouble to OPEC.
The oil cartel is experiencing increasing internal incoherence. The recent meetings it held were as controversial as ever and exposed existing disagreements between the member countries. That means the strategic goal of OPEC to put ground to the oil price may be an increasingly hard target to reach. That’s going to be a key point of struggle as $45 is notable below the minimum acceptable price range for most cartel member countries - the breakeven level for many of them is above $50. Therefore, whatever their disagreements are, they will likely ensure the supply cuts to keep the price above those levels. But how much above – that’s the big question.
Officially, Saudi Arabia expects the oil price to be between $45 and $50 through 2021 on average. That’s the range it factored into Aramco’s – and, hence, state’s – revenues (although that’s no longer going to be shared with the public – KSA doesn’t like sharing Aramco’s dividend plans). EIA and IEA say roughly the same and give moderate projections on the global oil demand while the oil glut is expected to clear by the end of 2021.
So here you go with practical advice based on the above observations.
The G20 summit took place in Bali, Indonesia, on November 2022…
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?
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