2022/02/22 (007) Technical Analysis – UKOIL

Toxic mixture for stock markets: „War fear and oil price shock“
Oil prices more or less round about 100 USD,
accelerates inflation even faster…


And the consequences of the lockdowns in most states in our so-called West are also making themselves felt. Money, fiscal policy, is now driving up commodity prices after the paper markets (especially stock markets) have been inflated for years – since financial crises 2008. Because the amount of available capital is growing faster than the supply of raw materials. And the stupid politics of the left-liberal US Democrats, under the clock of Joe Biden, let alone my political ex (here in Germany), my green party, will certainly not ensure that this will change so quickly in the near future.

That`s why, I will pay more attention to the oil price development – here in our DEVISE 2 DAY Technical Analysis. Because this affects us all – both taxpayers and consumers. Let alone us interested financial markets participants…OPEC+ lags behind plan:
A million barrels a day are missing – only the oil power brokers are happy
The Russia-Ukraine conflict has once again pushed the oil price up significantly. Actually, higher production volumes would now be appropriate, but the OPEC + funding organization officially refuses. Behind the facade, however, the heads of state are struggling for unity.

400,000 barrels more per day every month until the pre-corona level is reached again at the end of May – OPEC+ does not want to shake this plan, which was drawn up after long negotiations last year, even in view of the further increase in oil prices. “The pandemic has taught us to be careful,” Saudi Energy Minister and Prince Abdulaziz bin Salman said at an industry conference in the capital, Riyadh, over the weekend. The memories of the pandemic year 2020 are still too fresh, when global economic slumps and price disputes within the organization even caused the oil price to drop negatively at times. This would have devastating consequences for many OPEC countries, most of which are dependent on the oil business. This is how OPEC+ is swearing by their unity these days. The fact that the barrel price has surged from $83 to $91 in the past few weeks (plus ten percent) has nothing to do with the production volumes or global economic development anyway, but is solely due to geopolitics, in particular the impending war between OPEC+ member Russia and Ukraine. “We are all hoping for a de-escalation,” said Suhail al-Mazrouei, Energy Minister of the United Arab Emirates, “our plan has worked so far and I don’t think the market is badly undersupplied.” Not all experts share this view. The International Energy Agency IEA recently warned the OPEC countries to increase their production volumes – without criticizing the actual OPEC plan.

Three quarters of OPEC+ countries miss production targets
The crux is as follows: although the oil states have set production targets that would also be sufficient in the current situation, some member states are not able to achieve these targets. This creates a mismatch between the amount of oil OPEC wants to produce and the amount it actually puts on the market. According to IEA calculations, this difference is now around one million barrels a day. This corresponds to about half of what Germany consumes in oil every day.

Around three quarters of the OPEC+ countries are currently below their production targets. They are furthest behind in Nigeria, Angola, Malaysia and Saudi Arabia. Only the Emirates, Gabon, South Sudan and Kazakhstan even exceed their quota. In the wake of the Corona crisis, poorer producing countries are often struggling with a lack of foreign investment or with the consequences of the pandemic in their own country, which continue to restrict production. More powerful members like Saudi Arabia, the Emirates and Iraq could fill the gap but are refusing.

That affects the rest of the world. Since the end of February 2021, oil prices have risen by around 50 percent. The same applies to the price of natural gas. As a result, the prices for products obtained directly from it, such as petrol, heating oil and gas for heating, as well as for all other products that are either made from oil or oil products are necessary for their transport and storage, are increasing globally. As a result, higher energy prices are believed to be the main driver of global inflation. In Germany, the average price increase for energy in January was 20.5 percent – four times higher than the general inflation rate.

While prices are unlikely to continue rising at this rate, OPEC+ doesn’t anticipate big price cuts either. In addition, global investments in the oil business would lag too far behind the general economic upswing – which is also a consequence of changes in the climate protection efforts of Western investors and oil giants in particular. However, OPEC+ sees reintegrating Iran as a measure to throw