Monday, May 16

Oil: only Russia can change the target of 100 dollars a barrel


Oil futures maintain uncertainty in global commodity markets in the face of the geostrategic instability presented by the possibility of Russia invading Ukraine, before the negotiations that it maintains with the United States and NATO and that could have a decisive impact on the evolution of the crude oil market during the current year.

All this occurs after the fall in reserves, which sank last Friday due to the accumulation of Russian troops on the border with Ukraine that has intensified the conflict in an ordeal in parallel to the diplomatic efforts that all parties maintain. This fact could also lead not only to significant US and European Union sanctions, as you have already warned and that would directly revert to the supply of Russian oil and gas to the market.

In its price chart we see that the value clearly suffers from the impact of the crisis in Ukraine with the sword of Damocles of a possible Russian invasion, which has exponentially stressed the markets in recent sessions. Even so, it keeps its price at bay with hardly any cuts, in the last 5 sessions, of 0.28%. The last month the advances are 9.77%, in a quarter of 1.33% and so far this year it is earning double digits. Specifically, 10.75%.

Brent oil annual price

Prices that have come to place at a maximum that for Brent was close to 90 dollars a barrel last week, a record price not seen since the close of October 2014. An increase in its cost caused by the sustained demand that is already beginning to approach pre-pandemic levels, while production has been halted in places like Libya, Nigeria, Ecuador and Angola. And even, in this case due to extreme cold, in Canada.

All this is added to the exponential increase in the price of natural gas, which contributes to the increase in crude oil, especially because it causes an increase in the demand for diesel and oil as substitutes for natural gas.

In this way, Goldman Sachs believes that Brent prices will exceed $100 a barrel this year and they consider that the oil market continues to present a deficit that they consider “surprisingly large” because the omicron variant has affected that market much less than expected. In fact, predicts a cost for Brent of 90 dollars in the first quarter, $95 in the second and $100 a barrel in the latter part of 2022.

While, from Morgan Stanley also envisions a price of $100 a barrel in the second half of the year. And it will reach that level, they point out from the US entity for what they consider a triple deficit: low inventories, reduced additional production capacity to which is added, low investment. Thus they raise their expectations on the barrel for the third and fourth quarters to $100 of 2022, compared to the previous ones, of 90 and 87.5 dollars, respectively.

If we look at what the premium indicators prepared by Investment Strategies give us, we see that Brent oil reaches the 10 total points of the 10 possible for the value in the market. With an upward trend in the medium and long term, positive slow and fast total momentum, growing volume of business in the medium and long term and also volatility, contained and decreasing in both aspects, both in the medium and long term

Brent oil premium indicators

According to the latest report from the International Energy Agency, in the first quarter of this year, A seasonal decline in demand is expected, exacerbated by more telecommuting and less air travel. They note that “we have raised our global demand estimates by 200,000 barrels per day for 2021 and 2022, resulting in growth of 5.5 million barrels vs. 2020 and 3.3 vs. 2021, respectively, due to tighter restrictions. soft from Covid”.

World oil supply in 2022 has the potential for a Saudi-led profit of 6.2 million barrels a day if OPEC+ fully cancels its cuts. OPEC+ oil production could increase this year by 4.4 million barrels, resulting in a reduction of effective available capacity in the second half of this year of 2.6 million barrels, mainly in the hands of Saudi Arabia. Saudi Arabia and the United Arab Emirates. The United States will lead non-OPEC+ growth of 1.8 million barrels per day in 2022.

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