Stephen Innes
SPI Asset Management
Oil agencies expect solid global oil demand growth with a significant contribution from China, and subject to the burden of proof, many traders think it could push the market back into deficit from June onwards and drive Brent back up to $105/bbl by 2023Q4.
However, if the oil market turned out to be softer than most forecast, then OPEC should be able to put a floor under prices given its strong pricing power. OPEC could keep its production lower for long beyond its June 4th meeting or implement further cuts.
OPEC remains a critical piece of the puzzle. Because of the voiced frustration with the Western energy policies, including the price cap on Russian oil, and the risk it creates precedents, it will most certainly limit the group’s willingness to raise production and play ball with the West.
OPEC+ Joint Ministerial Monitoring Committee, which reviews the current state of the oil market, are scheduled to meet on Feb. 1. And based on their heightened annoyance with G-7 interference and with recession concerns top of mind, they are expected to hold production steady. So far in Asia, oil prices remain well supported by the OPEC PUT amid bullish China reopening momentum.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.
Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
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