Crude Oil

Crude Oil weekly special report based On 1.00 Lot Calculation:

SUPPLY EXPECTATION:

• EVENT (DECEMBER 5, 2022): G-7 GROUP AND THE E.U. PRICE CAP ($60) HAS STARTED TAKING PLACE: The G7 (Group of Seven) consists of the UK, US, Canada, France, Germany, Italy and Japan. The introduction of a price cap on Russian oil means countries that sign up to the policy will only be permitted to purchase Russian oil and petroleum products transported via sea that are sold at or below the price cap ($60 a barrel).
• EVENT (DECEMBER 5, 2022): EU BAN ON 90% OF RUSSIAN OIL IMPORTS TO THE EU TO START TAKING PLACE. European Union leaders agreed to cut 90% of oil imports from Russia by the end of this year. The embargo would encompass 90% of all imports from Russia once Poland and Germany, which are also connected to the pipeline, stop buying it by the end of the year. Sanctions are still expected to cut Russian oil production by 2 million barrels a day in Q1 of 2023, according to the International Energy Agency.
• EVENT (FEBRUARY 5, 2023): THE EUROPEAN UNION WILL STOP IMPORTING OIL PRODUCTS FROM RUSSIA ON FEBRUARY 5, 2023. Analyst expect that due to current sanction and restrictions, the Russian oil exports could suffer declines and therefore their oil production could fall in Q1 of 2023. The International Energy Agency expects the Russia’s oil production to fall by up to 2 million barrels a day from current of around 11.50 million barrels a day.
• OPEC+ has started cutting its oil production by 2 million barrels a day from November 2022, but more may come, as oil prices fell to the lowest in almost a year. This would be the largest production cut since 2020. These cuts will remain in place from November 2022 until December 2023. The next ministerial meeting is scheduled for June 3 and June 4, but extraordinary conditions could gather them up even before.

DEMAND EXPECTATION:

• CHINA REOPENING: ONE OF THE LAST MEASURES OF CHINA’S COVID ZERO POLICY TO BE REMOVED ON JANUARY 8, 2023 by opening the borders for travel. BARCLAYS predicts China reopening should increase oil demand by 1.5 to 2 million barrels a day, worth $20 on Oil. GOLDMAN SACHS predicts China will be reopening in Q2 of 2023. A full reopening case imply an upside of $15 per barrel according to the bank. China eased a range of COVID restrictions in early December, including allowing some people to quarantine at home rather than in centralized camps and scrapping virus tests to enter most public venues. BANK OF AMERICA: The Bank expects oil to rise by 15 dollars along with the China reopening.

ANALYST OPINION:

• GOLDMAN SACHS forecasts $90. MORGAN STANLEY forecasts $110 in 2023. UBS forecasts $107 a barrel. COMMERZBANK forecasts $100 a barrel. BANK OF AMERICA forecasts $104 a barrel. DEUTSCHE BANK forecasts $100 a barrel in Q1 2023.

DOWNWARD PRESSURE:

• US STRATEGIC PETROLEUM RESERVES (SPR) TO REFILL AT $68 - $72 AND FIRST TRANCH OF 3 MILLION BARRELS IS TO BE PURCHASED IN FEBRUARY 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.
• SAUDI ARABIA: Saudi Arabia, de facto OPEC leader, maintains a fiscal breakeven oil price of around $80 a barrel.

Crude Oil, January 5, 2022
Current Price: 74

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) 05/01/2023
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• You may wish to consider closing your position in profit, even if it is lower than suggested one
• Trailing stop technique can protect the profit – Ask your Senior Account ManagerClient Manager for more detail