{"id":65689,"date":"2023-07-06T15:37:23","date_gmt":"2023-07-06T12:37:23","guid":{"rendered":"https:\/\/www.ironfx.com\/?p=65689"},"modified":"2024-08-26T12:28:24","modified_gmt":"2024-08-26T09:28:24","slug":"oil-moves-higher-despite-recession-worries","status":"publish","type":"post","link":"https:\/\/www.ironfxcn.com\/vi\/oil-moves-higher-despite-recession-worries\/","title":{"rendered":"Oil moves higher despite recession worries"},"content":{"rendered":"

WTI appears<\/a> to be moving higher following statements made by the Saudi Energy Minister during OPEC\u2019s two-day seminar. In this report, we aim to shed light on the factors driving WTI\u2019s price, assess its future outlook and conclude with a technical analysis.<\/p>\n\n\n\n

OPEC\u2019s two-day seminar.<\/strong><\/h2>\n\n\n\n

We note some interesting<\/strong> developments <\/strong>in the oil<\/strong> markets, following the beginning<\/strong> of OPEC\u2019s<\/strong> two-day seminar<\/strong> which started yesterday. The UAE\u2019s<\/strong> energy<\/strong> minister<\/strong> stated that they would not<\/strong> be announcing<\/strong> any extra voluntary<\/strong> cuts<\/strong>, striking<\/strong> a blow<\/strong> to the Kingdom\u2019s<\/strong> ambitions<\/strong> to drive<\/strong> oil<\/strong> prices<\/strong> up<\/strong>, following a statement by Saudi Arabia\u2019s energy minister<\/strong> that the recent<\/strong> production<\/strong> cuts<\/strong> by Riyadh and Moscow<\/strong> showed<\/strong> \u2018unity\u2019<\/strong>. In addition, the Kingdom<\/strong> announced that they will extend by 1-month<\/strong> their oil<\/strong> production cut<\/strong>, in an apparent attempt to drum<\/strong> up<\/strong> oil<\/strong> prices<\/strong>. Furthermore, the energy<\/strong> minister<\/strong> stated that \u201cthe market will not be left unattended<\/strong>\u201d, seemingly showing cracks<\/strong> in the perceived<\/strong> unity of OPEC<\/strong>, with Saudi Arabia trying to increase<\/strong> prices<\/strong>, whilst other nations are attempting<\/strong> to increase<\/strong> production<\/strong>, or at the very least keep<\/strong> them at current<\/strong> levels<\/strong>.<\/p>\n\n\n\n

China\u2019s worrying economic data.<\/strong><\/h2>\n\n\n\n

The release of China\u2019s<\/strong> Caixin Services PMI<\/strong> figure<\/strong> for June, which came in lower<\/strong> than expected<\/strong>. The continued deterioration<\/strong> in Ti\u1ebfng Trung Qu\u1ed1c<\/strong> economic activity<\/strong>, could be of concern<\/strong> to oil<\/strong> traders, as it  may be perceived as an early<\/strong> warning<\/strong> signal<\/strong> that one of the world\u2019s largest economy\u2019s, appears unable<\/strong> to induce<\/strong> economic<\/strong> growth<\/strong>, following it\u2019s post pandemic re-opening<\/strong>. Furthermore, the<\/strong> ongoing Geopolitical<\/strong> tensions<\/strong> between the US<\/strong> v\u00e0 China<\/strong>, could impact<\/strong> oil<\/strong> prices, with China<\/strong> stating that they would be controlling<\/strong> the number of exports<\/strong> of some kim lo\u1ea1i<\/strong> that are widely used for the construction of semi-conductors.  Should the tit for tat measures<\/strong> continue, we may see the Chinese Manufacturing Industry<\/strong> feel the brunt<\/strong> of a gradual<\/strong> decoupling<\/strong> by world<\/strong> economies<\/strong>, in order to avoid<\/strong> being swept<\/strong> up in the peacock<\/strong> like manners<\/strong> of the world\u2019s two largest economies<\/strong>. Therefore, on a more macro-economic<\/strong> view we may see oil<\/strong> prices<\/strong> moving<\/strong> lower<\/strong>, given China\u2019s<\/strong> status<\/strong> as the world largest<\/strong> oil<\/strong> guzzling<\/strong> giant<\/strong>, should their economic<\/strong> woes<\/strong> continue<\/strong>.<\/p>\n\n\n\n

India\u2019s oil refineries settle payments using the Chinese Yuan.<\/strong><\/h2>\n\n\n\n

According to a report by Reuters, Indian oil refinerie<\/strong>s have announced that they will be paying for Russian oil using the Chinese Yuan<\/strong>. Such a move could potentially help Russia<\/strong> evade<\/strong> sanctions<\/strong>, imposed by the United States and their allies. Furthermore, potential<\/strong> evasion<\/strong> of sanctions, could even undermine<\/strong> OPEC\u2019s attempts to reduce oil production<\/strong>, as Russia could possibly continue<\/strong> pumping<\/strong> oil<\/strong> into the market via India, using the country<\/strong> as a \u201cdistribution<\/strong>\u201d hub<\/strong> into the global<\/strong> oil<\/strong> markets<\/strong>.<\/p>\n\n\n\n

Iran attacks two oil tankers in the Gulf of Oman<\/strong><\/h2>\n\n\n\n

According to the U.S. Naval Forces Central Command of the U.S. 5th Fleet<\/strong>, the US Navy on Wednesday prevented<\/strong> Iranian<\/strong> warships<\/strong> from seizing<\/strong> two oil tankers<\/strong> off the coast of Oman. According to various media outlets, the Iranian<\/strong> warships<\/strong> fired warning<\/strong> shots<\/strong> at the two tankers<\/strong> but backed off once the US Naval vessel<\/strong> arrived on scene. Should<\/strong> the security<\/strong> of one of the world\u2019s<\/strong> most crucial<\/strong> oil<\/strong> arteries<\/strong> be questioned<\/strong>, we may see market<\/strong> worries<\/strong> of a threat<\/strong> to the supply<\/strong> of oil<\/strong> being translated<\/strong> into higher<\/strong> prices<\/strong> for the commodity<\/strong>.<\/p>\n\n\n\n

Ph\u00e2n t\u00edch k\u1ef9 thu\u1eadt<\/strong><\/h2>\n\n\n\n

WTI Cash 4H Chart<\/strong><\/h3>\n\n\n\n
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