Crude Oil

Crude Oil weekly special report based On 1.00 Lot Calculation:

NEWS:

• SAUDI ARABIA EXTENDS 1 MILLION BARRELS A DAY PRODUCTION CUTS INTO AUGUST. Saudi Arabia, the world's biggest crude exporter, on Monday said it would extend its voluntary output cut of 1 million barrels per day (bpd) to August, while Russia and Algeria volunteered to lower their August output and export levels by 500,000 bpd and 20,000 bpd, respectively.

• SUPPLY DISRUPTION IN LIBYA AND NIGERIA. Libya’s second-biggest oil field is in the process of shutting due to protests. The Sharara deposit in the southwest of the country will gradually halt production. The shutdown follows a stoppage at Libya’s El Feel field, which was also targeted by protesters. Before the disruption, Sharara was at about 250,000 to 260,000 barrels a day, and Waha was at about 290,000 barrels a day. There was also disruption in Nigeria, the largest oil producer in Africa. That country’s Forcados oil terminal was stopped so that divers could inspect a possible leak, impacting around 225,000 barrels a day of oil.

OIL MARKETS ARE STILL EXPECTED TO GET INTO DEFICIT:

• OPEC+ TO BE CUTTING OIL PRODUCTION BY 4.66 MILLION BARRELS A DAY IN 2023 AFTER SAUDI ARABIA PLEDGED AN ADDITIONAL 1 MILLION BARRELS A DAY OF PRODUCTION CUTS IN JULY 2023. Saudi's energy ministry said the country's output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May, the biggest reduction in years. OPEC+ had in place cuts of 3.66 million bpd, amounting to 3.6% of global demand, including 2 million bpd agreed last year and voluntary cuts of 1.66 million bpd agreed in April. Those cuts will be extended until the end of 2024.

• OPEC+ OIL PRODUCTION AT THE LOWEST IN 19 MONTHS.

• US DRIVING SEASON USUALLY STARTS AT THE END OF MAY UNTIL EARLY SEPTEMBER. When the driving season in the US, the largest petroleum consumer in the world, gets underway analysts see higher consumption and therefore higher demand.

• CHINA’S ECONOMY TO RECOVER BETTER IN Q3 AND Q4 WITH SURGING OIL DEMAND. Due to additional stimulus packages in China, analysts expect the Chinese economy to recover at quicker pace in the second half of the year that starts in July.

• DEFICIT CREATION: FALLING SUPPLY AMID RISING DEMAND COULD CREATE A DEFICIT. The above analyzed points show that demand could be expected to outpace supply, creating a hole that is known as deficit. According to Goldman Sachs, that deficit could be as much as 1.5 million barrels a day.

DOWNWARD PRESSURE LOOKS CONTROLLED BY TWO MAIN FACTORS:

• US STRATEGIC PETROLEUM RESERVES (SPR) TO REFILL AT $68 - $72. NEXT POTENTIAL TIMING: Q3, 2023. The Biden administration has already initiated process of replenishing the strategic petroleum reserve and the analysts believe that the US SPR will purchase around 12 million barrels by the end of 2023. President Biden ordered the release of a total of 180 million barrels of crude this year in response to a price rally caused by Russia’s invasion of Ukraine. Currently, the Strategic Petroleum Reserves stand at 371.6 million barrels, its lowest since early 1980’s.

• SAUDI ARABIA: Saudi Arabia, de facto OPEC leader, maintains a fiscal breakeven oil price of around $80 a barrel.

ANALYST OPINION:

• JPMorgan forecasts $86 in 2023. Goldman Sachs predicts $86 by the end of the year. UBS forecasts $95 a barrel. Bank of America forecasts oil at $80 a barrel. Barclays predicts $87 by the end of the year.

Crude Oil, July 14, 2023
Current Price: 76.50

Example of calculation base on weekly trend direction for 1.00 Lot¹

1. 1.00 lot is equivalent of 1000 units

2. Calculations for exchange rate used as of 09:00 (GMT+1) 14/07/2023

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• You may wish to consider closing your position in profit, even if it is lower than suggested one

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