Crude Oil

Crude Oil weekly special report based On 1.00 Lot Calculation:

SUPPLY EXPECTATION:

• EVENT (FEBRUARY 1, 2023): OPEC+ JOINT MINISTERIAL MONITORING COMMITTEE (JMMC) MEETING. 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. These cuts will remain in place from November 2022 until December 2023. JPMorgan sees OPEC+ being urged to cut additionally by 400- 500,000 barrels a day in February.
• EVENT (FEBRUARY 5, 2023): EU BAN ON RUSSIAN OIL PRODUCT (DIESEL, NAPHTA) IMPORTS TO START TAKING PLACE. The EU has already banned 90% crude oil imports from Russia on December 5, 2022. In addition, the US and their allies are considering implementing price caps on Russia petroleum product exports. The plan is to impose caps on high- value exports such as DIESEL, and another on low- value exports such as fuel oil. 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 (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).

DEMAND EXPECTATION:

• CHINA REOPENING (JANUARY 8, 2023) AND THE CHINESE LUNAR NEW YEAR (JANUARY 22, 2023): Holiday travel inside China surged 74% from last year after authorities scrapped COVID-19 restrictions. Meanwhile, Gasoline consumption increased over the holiday by 20% from a year ago, with record flows of cars on the nation’s highways GOLDMAN SACHS predict China will be reopening in Q2 of 2023. A full reopening case could imply an upside of $15 per barrel. BARCLAYS: China Reopening Could Significantly Tighten Physical Oil Markets, Unlocking 1.5-2 million barrels a day of incremental demand in relatively short order, worth $20/B On Brent. BANK OF AMERICA: Oil could jump 15 dollars with the Fed pivoting and China reopening.

ANALYST OPINION:

• JPMorgan forecasts $90 in 2023. Goldman Sachs predicts oil at $90 and $95 in Q1 and Q2, respectively. By the end of the year, oil could rise to $105. Morgan Stanley Price Target stands at $110 in 2023. UBS forecasts $107 a barrel. Commerzbank targets $100 a barrel. BANK OF AMERICA 2023 FORECAST: Oil at $104 a barrel. Deutsche Bank forecasts $100 in Q1 2023.

DOWNWARD PRESSURE:

• US STRATEGIC PETROLEUM RESERVES (SPR) TO REFILL AT $68 - $72. The Biden administration said they will start buying crude to replenish the strategic petroleum reserve when prices fall to the range between $68- $72 per barrel. 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. Once the US starts buying oil to refill their strategic reserves, it could boost the oil demand, which in turn could be support of the oil prices. In addition to that, the US has incentives to keep the oil prices higher to encourage domestic producers to keep producing and supplying oil.
• SAUDI ARABIA: Saudi Arabia, de facto OPEC leader, maintains a fiscal breakeven oil price of around $80 a barrel.

Crude Oil, January 30, 2023
Current Price: 79.20

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 10:00 (GMT) 30/01/2023
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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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