Brent Falls on Supposed Russian Oil Price Cap

0
6

BRENT CRUDE OIL (LCOc1) ANALYSIS & TALKING POINTS

  • Updates on Russian oil price cap focused for Brent crude.
  • FOMC minutes cap USD over long weekend.
  • COVID cases in China have hit historic highs dampening demand for oil.
  • September is coming down under pressure again.

Recommended by Warren Wins

Get Your Free Oil Forecast

BRENT CRUDE PETROLEUM FUNDAMENTAL FUND

Brent crude is trading marginally higher this Wednesday although still relatively depressed on the news of the G-7 proposal to increase the Russian oil price cap from around. $60 to $65-$70. What this means for oil markets is that if this new range is agreed, Russia is then unlikely to stop supply because these prices as would be the case with the $60 level The reason behind this is the fact that Urals (Russian crude oil) was selling at these levels relative to Brent crude. This being said, there was no agreement made by the member countries with discussion continuing today.

Furthermore, one of the main objectives of the price cap is to financially handicap Russia and is likely to have minimal to zero impact for the Russians exhibiting the EU’s preference for supply stability.

Last night, weekly storage data from EIA tracked the previous API data with the change in stocks falling more than expected. 3.69 Mbs but was unable to discourage Brent prices.

Trade Smarter – Join the DailyFX Newsletter

Get timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

The USD also weakened yesterday and continues into today, which makes the downward move on Brent much more significant highlighting the importance of the price cap data. A lot of US economic data was released yesterday with more surprises on both consumer sentiment and durable goods orders, however, initial jobless claims exceeded forecasts and PMI data missed in all metrics. The much-anticipated FOMC minutes were somewhat disappointing, as no new information appears, but rather reiterates the need for interest rate moderation fueling dollar sales.

With no U.S. central economic data for the rest of the week due to the Thanksgiving holiday, volatility may remain subdued unless we see further clarification around the Russian oil price cap as well as possible statements from OPEC members dealing with expanded production earlier this year. per week

From a demand perspective, China’s COVID cases reached record numbers today leaving forecasts for the major oil consumer depressed until the virus can be contained by allowing less restrictive measures.

Basic Business Knowledge

Trade of Goods

Recommended by Warren Wins

TECHNICAL ANALYSIS

BRENT RAW (LCOc1) CHANGE RAPPER

image1.png

Chart prepared by Warren WinsIG

Price action on the daily Brent crude chart reflects the increasing headwinds. I foresee scope for further downside, but price will depend on OPEC+ next week as well as clarity around the Russian oil cap.

Key resistance levels:

Key support levels:

IG CUSTOMER SENTIMENT: BASSIST

IGCS shows retail traders NET LONG on Crude Oil, with 86% of traders currently holding long positions (at this writing). At DailyFX we usually take a contrarian view to crowd sentiment however, due to recent changes in long and short positions, we run a short-term adverse bias.

Contact and follow Warren on Twitter:@WVenketas



Source

LEAVE A REPLY

Please enter your comment!
Please enter your name here