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Opposing forces = choppy market

Yesterday’s reaction to the US CPI release and the EIA stock report and this morning’s retreat is a true reflection of the paralyzed state of the oil market. What is the ultimate driving force? Fears of recession or supply shortage? The global economy is sputtering because of high inflation exacerbated by the Ukrainian crisis and [...]

2022-05-12T08:48:14+00:00May 12th, 2022|

Searching for unanimity

It is turning into a week horribilis for oil bulls. Prices see-sawed throughout much of yesterday before closing deep in the red for a second straight session. Brent and WTI settled more than $3/bbl lower on Tuesday, taking this week’s losses to almost 10%. That is because the underlying economic malaise is still there. Concerns [...]

2022-05-11T10:36:21+00:00May 11th, 2022|

Falling equities drag oil lower

Stalling talks between EU members on the sixth round of sanctions on Russia and Vladimir Putin’s unexpectedly lukewarm Victory Day speech diverted attention from the developing supply tightness and the spotlight shifted back on economic considerations. The arduous task of getting landlocked EU countries sign up to the proposed sanctions on Russian oil sales progresses [...]

2022-05-10T12:15:57+00:00May 10th, 2022|

Demand 0 – 1 Supply

The first week of May was dominated by a battle between two opposing forces: demand worries stemming from China's prolonged COVID-19 lockdowns and the EU’s proposal to ban Russian oil imports. Dozens of major Chinese cities are currently under a full or partial lockdown, thanks to a strict COVID policy. Top of the list is [...]

2022-05-10T12:19:53+00:00May 9th, 2022|

Riding the embargo wave

Just like clockwork, OPEC+ agreed to another output increase of 432,000 bpd in June, in line with an existing plan to gradually unwind supply curbs. The producer group downplayed the prospect of a gaping supply deficit, arguing instead that higher prices do not reflect oil fundamentals but panic among oil buyers. This is nonsensical. The [...]

2022-05-06T08:19:54+00:00May 6th, 2022|

The China effect

There is no getting away from Chinese demand destruction fears. The world’s second-biggest economy is under pressure from pandemic-related disruptions, and this is putting a downer on the near-term demand picture. Covid-19 curbs in Beijing were tightened yesterday as a new round of mass testing got underway. Authorities are doing everything they can to avoid [...]

2022-05-04T07:51:06+00:00May 4th, 2022|

It’s supply, not the economy, stupid

Financial markets, including oil futures, are complex adaptive systems. Just because we understand each component, we might not grasp the results of the system as a whole. Economists believe the reason being is that system-level outcome is greater than the sum of the components because market participants often interact in ways that predicting system-level effects [...]

2022-05-03T07:49:31+00:00May 3rd, 2022|

Will they, or won’t they?

All eyes are on the European Union as it seemingly edges closer to imposing an outright ban on Russian oil imports. The likelihood of an EU embargo on Russian oil took a big step closer to becoming a reality yesterday. This came after Germany, the bloc’s de facto leader and main opponent of a ban [...]

2022-04-29T13:43:37+00:00April 29th, 2022|
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