empty
25.01.2022 04:22 PM
Oil rally continues: what can trigger a correction?

If U.S. stocks are an indicator of global risk appetite, then oil is an indicator of the health of the global economy. As a rule, the S&P 500 and Brent go the same way, but at the start of 2022, they parted ways. Fears that the Fed's aggressive monetary tightening will slow U.S. GDP growth are leading to a sell-off in equities as oil rises amid a recovery in global demand and supply woes. It seems that the health of the global economy is all right, only investors are in no hurry to buy risky assets.

Dynamics of oil and S&P 500

This image is no longer relevant

Despite the calls of U.S. President Joe Biden, American shale oil producers are in no hurry to increase production and prefer to spend money not on new drilling rigs, but on payments to shareholders and on loans. It is not conducted on the speech of Biden and OPEC+. At the same time, even increasing production by 400,000 b/d per month, in the light of the limited technical capabilities of the countries participating in the Alliance, looks problematic. BNP Paribas estimates that OPEC+ will not be able to meet its target, also because spare capacity has been halved over the past year.

The situation is aggravated by the tense geopolitical situation in the Middle East and Eastern Europe. In the first case, we are talking about attacks by Houthi militants on the oil facilities of the UAE, about the explosion of an oil pipeline in Turkey, which for some time stopped the supply of oil to this state from Iran. In the second, about the escalation of the conflict between the Russian Federation and the West, which may result in the introduction of Russian troops into the territory of a neighboring country.

According to RBC Capital Markets, the likelihood of such a scenario is 50 to 50. Sanctions against Moscow will lead to higher prices for gas in Europe and oil products, which are planned to replace it. In the worst case, events will develop according to the Iranian scenario. A sharp decline in Tehran oil exports at one time led to an increase in Brent and WTI quotes.

At present, it is Iran, not U.S. shale producers, that is the wild card in the oil market. If the country manages to remove restrictions, oil prices are able to enter a correction.

Selling Iranian oil before sanctions

This image is no longer relevant

This will be facilitated by overly inflated speculative net-longs for key grades of oil and oil products. Hedge funds have built them up for five consecutive weeks and brought the ratio of bullish longs to bearish shorts to 6.24 to 1, compared to 3.83 to 1 as of mid-December.

However, while Tehran has not come to an agreement with the West, there is not a cloud in the sky for the oil market. Even the possible strengthening of the U.S. dollar in response to the "hawkish" surprise from the Fed at the meeting on January 25-26 does not really scare buyers of the North Sea variety.

Technically, Brent's rally towards the $100 and $110 per barrel targets in the Wolfe Wave pattern is not going to stop. The roller coaster of trading on January 24 allowed us to form longs on pullbacks at attractive levels, in accordance with the previous recommendation . We continue to buy oil in the hope of achieving our targets.

Brent, Daily chart

This image is no longer relevant

Seleccione el marco de tiempo
5
min
15
min
30
min
1
hora
4
horas
1
día
1
s.
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

Análisis del par GBP/USD. 13 de mayo. La libra esterlina recibió un golpe bajo

El par de divisas GBP/USD también cayó rápida y alegremente el lunes. EE. UU., representado por el Secretario del Tesoro Scott Bessent, anunció el primer avance en las negociaciones

Paolo Greco 07:22 2025-05-13 UTC+2

Análisis del par EUR/USD. El 13 de mayo. EE. UU. y China llegaron inesperadamente a un acuerdo.

El par de divisas EUR/USD cayó el lunes como una piedra. ¿Adivinan a quién hay que agradecerle esto? Por supuesto, a Donald Trump. Aunque esta vez, solo de forma indirecta

Paolo Greco 07:22 2025-05-13 UTC+2

El Bitcoin ha cumplido el objetivo mínimo

El Bitcoin ha superado la marca de los 100 000, ha entrado en fase de consolidación y así ha confirmado la regla. Anteriormente, tras romper niveles psicológicamente importantes, la criptomoneda

Marek Petkovich 14:49 2025-05-12 UTC+2

Análisis del par GBP/USD. El 9 de mayo. El Banco de Inglaterra ha confundido aún más a los traders.

El par de divisas GBP/USD el jueves se negoció primero a la baja y luego al alza, por lo que la conclusión es evidente: el mercado no ha decidido

Paolo Greco 07:45 2025-05-09 UTC+2

Análisis del par EUR/USD. El 9 de mayo. Powell y la Fed no cambiaron nada.

El par de divisas EUR/USD continuó negociándose el jueves dentro del mismo canal lateral, claramente visible en el marco temporal de una hora, prácticamente hasta la noche. Tras la reunión

Paolo Greco 07:45 2025-05-09 UTC+2

Análisis del par GBP/USD. 7 de mayo. Trump no recibió la llamada desde China. Tuvo que retroceder.

El martes el par de divisas GBP/USD inició un nuevo ciclo de crecimiento mientras el euro continuaba su flat,. En realidad, el crecimiento comenzó ya el lunes, pero

Paolo Greco 07:26 2025-05-07 UTC+2

Análisis del par EUR/USD. El 7 de mayo. La reunión de la Fed, como nuevo "dolor de cabeza" para el dólar.

El par EUR/USD continuó moviéndose de manera lateral durante la jornada del martes. Recordemos que el flat general dura ya casi un mes, pero además de eso, el mercado

Paolo Greco 07:26 2025-05-07 UTC+2

Análisis del par GBP/USD. El 6 de mayo. Trump toma el control de la industria cinematográfica.

El par GBP/USD también se negoció al alza durante la primera mitad del día lunes, y a la baja durante la segunda. Aunque esta vez la moneda estadounidense no perdió

Paolo Greco 07:39 2025-05-06 UTC+2

Análisis del par EUR/USD. 6 de mayo. La protesta contra Donald Trump continúa.

El par EUR/USD comenzó un nuevo ciclo de crecimiento el lunes. Probablemente, ya nadie se sorprende por otra caída del dólar estadounidense. El mercado comenzó a vender la moneda estadounidense

Paolo Greco 07:39 2025-05-06 UTC+2

El Bitcoin se ha perdido en el mismo lugar

Donald Trump prometió convertir a América en la cripto capital del mundo, casi organizar un paraíso para los entusiastas del mundo cripto. Sin embargo, en la práctica ha confundido tanto

Marek Petkovich 13:53 2025-05-05 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.