Oil is Ranging. So Where Will it break?

Feb 28, 2023

Oil has been in a range towards the end of last year and price is fighting against pushing below the 75 lvl and staying below it. It makes sense as the news is mixed because there are positive and negative news for Oil. Check out the following:

Positives for Oil:
-China economy recovering and demand increasing
-Russia plans to cut Oil exports by 25% and cut oil production by 500,000 barrels
-EU ban on Russian Oil
-OPEC maintaining production cuts
-JP Morgan looking at $90 a barrel for Oil in the middle of the year

Negatives for Oil:
-to the FED increasing rates for the next three meetings
-a possible global recession as majority of the G7 nations increase rates

So, what will win out? The negatives or the positives. I am thinking Oil will be able to push higher in the short term (next few months) and eventually fall as interest rates push higher and higher. If inflation does not drop as fast the FED wants, it will need to crank up the the heat on inflation, by doing it through interest rates. In 2025, I think Oil is going to push back up to $100, maybe higher and if this does happen, it would be good if I am still in the GBP/CAD as price would likely be around 1.45. On a side note, there is a big push to renewable energies and electric vehicles, but this requires a lot of resources to produce on a massive scales and in the interim Oil will be needed. If this massive push does happen, in the beginning, Oil will increase exponentially until renewables take over. In the next couple years, lets see if I am correct:

-price by the end of the year $80
-price in the beginning of 2024 (first 6 months) $70 - $80 and end of 2024 (last 6 months) $95
-price in 2025 $100+ (I keep thinking production is going to go off the rails with what's going to come out and the new technology)

Mar 17, 2023

Note

Oil is getting slammed and is trading below the $70 lvl. If the FED keeps increasing rates, even slowly, it will still hit Oil as the thought of a recession becomes more prominent. If these Central Banks start holding off on rates hikes along with the probability of rate cuts happening, Oil will push higher, pretty quickly also. The banking failures didn't stop the ECB from raising rates and they still raised by 50 basis points (there was less then a 20% chance they would, and they still did). It still looks like the 2nd Quarter is going to be interesting.

Apr 11, 2023

Note

Price is riding right below the resistance around 82.50. The markets were surprised when OPEC decided a reduction in production. But depending on what this CPI data prints and if the FED is going to Hike rates, will determine if Oil keeps pushing higher. If the CPI data comes out higher then expected (6% or more), then Oil is going to drop, maybe around 5 points as more rates signal more calls for a recession to happen. That'll go in line with Oil closing up that gap and I've normally seen gaps close up. But if CPI comes out better then expected, the FED Rate Monitoring tool might push back in the 50% area and up goes Oil, maybe to around 83/84.