Oil commentary - 25 May 2022
Morning all, it's been a while, hasn't it? Brent is trading this morning at $114.23 up 0.67 and WTi is trading up 0.81 at $110.58. So, it's over a week since I last ranted about the oil market and where was Brent trading then I hear ye cry? That's right, not very far from where we are now - $114.29 don't you know. This really is the state the oil market finds itself in and where it has been for some time. Does the threat of recession pull prices below $100? Couple that with demand concerns owing to something called "COVID" and, arguably, one could raise an eyebrow like The Rock at this very threat.?However, people's elbow or no people's elbow the market is very much looking at things from a different perspective in my view and that is the threat to global oil supplies. I think if the market were to look at the threat of recession, and price recession in, it would have done that by now. The market has an uncanny way of pricing in threats before they are actually threats and with a recession looming then how is oil still hovering between $110 - $115 per barrel on Brent? Put simply, the markets are concerned that there will not be enough oil in the coming months once an embargo on Russian oil imports is agreed by the EU. Now, there are several counter arguments to this - Will there be a ban on diesel? Or just crude oil? Will the flow of Russian oil still happen, and trade patterns are shifted? Will Arsenal ever qualify for the Champions League and not bottle it? Wait, Last question - wrong group chat. But the first two questions, and many others aside, are what traders are asking themselves. This is what is keeping oil prices supported but with so many balls in the air it is all about when, and how, they drop and what side of the range we break out of. Stats are out later in the US, keep your eyes on those for some short-term direction. Memorial Day coming up in the USA on Monday which signifies the start of driving season. Hmm. I'm back Monday, where it will be my final oil commentary. For now. Stay tuned. Good day.