2022/11/28 (119) Technical Analysis – UKOIL

UKOIL Traded At Intermediate New Low Today, On Monday
– We Stay Short And Don`t Caught Up On Falling As Well Rising Price Actions

Mr. Paisie leads the research and consulting business worldwide. Prior to joining Stratas Advisors, Paisie was a partner with PFC Energy, a strategic consultancy based in Washington, D.C., where he led a global practice focused on helping clients (including IOCs, NOC, independent oil companies and governments) to understand the future market environment and competitive landscape, set an appropriate strategic direction and implement strategic initiatives. He worked more than eight years with IBM Consulting (formerly PriceWaterhouseCoopers, PwC Consulting) as an associate partner in the strategic change practice focused on the energy sector while residing in Houston, Singapore, Beijing and London. In his weekly report on weekend he pointed 4 outs

As part of this forecast is the expectation that OPEC+ will continue to manage supply to align with demand considering the production capabilities of OPEC+ members. The next OPEC+ meeting is scheduled for December 4. At the beginning of last week there was some noise about members of OPEC+ considering a 500,000 b/d increase, but this was quickly knocked down by Saudi Arabia stating that the current cut of 2.0 million b/d  by OPEC+ will remain until the end of 2023. We do not expect any announcement of an increase in supply at the upcoming meeting. Instead, we are expecting that OPEC+ will continue with a strategy to protect a $90.00 oil price.
Over the weekend, a geopolitical development which has direct impact on the oil market occurred with the Biden Administration easing some of the oil-related sanctions on Venezuela, which will allow Chevron to initiate limited oil production in Venezuela. We are expecting that the impact on the oil markets – especially in the short-term – will have limited impact and any substantial increase in production will require more time and more capital investments. In our view, the action by the Biden Administration is as much about the concerns about the exodus of some seven-million people from Venezuela as concerns about oil supply.
We have been putting forth the view for months that  additional sanctions (including a price cap) on Russian oil exports will be of limited effectiveness; however, the possibility of additional sanctions creates uncertainty and the basis for a risk premium, which otherwise would not be part of oil prices. Recent reports indicate that Europe is considering a cap between $65.00 and $70.00 per barrel, which is not much below current marketprices for Russian crude. The proposed price illustrates the dilemma faced by the Europe and its allies in that sanctions that will actually impact Russia’s oil exports are likely to have a major negative impact on the economies of Europe as well as the global economy.

In our latest quarterly update of our global outlook for the oil markets, we are forecasting that global oil demand in 4Q will increase by 1.10 million b/d in comparison to 3Q. On average, we are forecasting that global demand will increase by 2.20 million b/d in 2022 and 2.55 million b/d in 2023.

All In All This Does Not Bode Well For A Further Rise In Oil Prices

That`s why we should consistently maintain our short UKOIL trading capability from USD 95 (with a stop price of USD 100). And that although I still want to argue differently as far as the headlines of the last few days are concerned. Namely in the case of China, as far as the price of oil is concerned. Since most colleagues, in their newspapers, and/or analyst firms, expect a falling oil price due to a lack of demand from China. Which I don’t disagree with, as you know if you read my D2D Affialte Financial Market Online Newspaper regularly. But I think that because of Russia’s war of aggression against Ukraine, the price of oil shot up above USD 100. And or rather the US economic policy, especially energy policy, of the US Democrats, under the watch of Joe Biden, in the White House. Because in January 2021, US inflation was more or less 2% and the oil price was USD 40. And that is the main driver, the driving force – if I am not mistaken in my detailed, clear synthesis – the crucial point. Because the US inflation rate has been on the way back for 5 months – since June 2022 at 9.1%. The annual inflation rate in the US slowed for a 4th month to 7.7% in October, the lowest since January, and below forecasts of 8%. It compares with 8.2% in September.

For The Past Few Months I Have Taken The View That The Oil Price Should Tend To Fall Below $90 Rather Than Trade Back Above $100

Nonetheless, I still expect the oil price to stay mostly in the $90 & $100 channel as upside resistance is coupled with downside support. Upside resistance stems from weakening and fragile economic conditions, most notably in Europe – and this is due to Russia’s war of aggression in Ukraine. So that, if you like, my readers, in a warlike environment, the domestic demand for oil in the individual states lags behind, and the price tends to stay up, precisely because of the risk of warof course. But that should be more than priced in at over USD 100, as already argued. So that support for bulls in oil prices should only come from relatively tight oil supply conditions!? Imagine what will happen to the price of oil as the war in eastern Ukraine nears its end? And or also the US inflation comes down? Right! The price of oil should get cheaper – despite the demand from China! And that’s what this short UKOIL 4XSetUps trading capability aims for. And then also for the year 2023. So just don’t lose your patience. And consistently comply with previously defined entry and exit prices. And that regardless of the uncertainty about security of supply, for us in the so-called West. As the US and its G7 allies continue to consider implementing the imposition of additional sanctions. However, I still believe that the additional sanctions (including a price cap) will be of limited effectiveness for the oil price action. Because the other factors, in particular Russia’s war of aggression against Ukraine and/or US inflation, are the two most important influencing factors for oil price developments.

However, In Todays Media Most Colleagues Argu Once Again That Oil Price Action Sinks As China Unrest Hits Sentiment

Brent crude futures dropped more than 2% below $82 per barrel on Monday, sinking to the lowest levels since January as widespread protests in China over its strict zero-Covid policy hurt investor sentiment and the demand outlook. Oil prices were also pressured by reports that the US granted Chevron Corp a license to resume oil production in Venezuela. The international oil benchmark has entered its fourth straight week of declines as Covid-related uncertainties in top crude importer China and mounting fears of a global recession gripped energy markets. Meanwhile, traders continued to track developments surrounding a G7 plan to impose a price cap on Russian oil, though reports of a high price cap eased worries that Russia would retaliate by cutting supply. Investors also remain cautious ahead of an OPEC+ meeting on Dec. 4 as the group of major producers is expected to keep supply tight