🚀 Insider time: buying oil
Major players gradually lost enthusiasm after the US Federal Reserve left interest rates unchanged, which could lead to a slowdown in economic growth and limit oil demand growth. An unexpected increase in US crude oil inventories also put pressure on prices. But the market is now capitalizing on stronger factors. ⠀ The Biden administration has used up nearly 40% of the nation's oil reserves in two years. The US sold its reserves on the open market at high prices and at the same time increased production, while OPEC+ members, on the contrary, limited supply. These actions helped to reduce inflationary pressure in the U.S., but by June 2023, the U.S. strategic oil reserve was at its lowest level since 1983 - only 346.8 million barrels. ⠀ Before the elections it is urgent to save the situation, so rumours are actively spreading that the US is forced to buy oil at current prices to replenish SPR reserves. But there are no obvious factors of such purchases yet. ⠀ The Middle East oil supply catastrophe is getting closer, and the chances of a ceasefire agreement between Israel and Hamas are minimal. ⠀ Saudi Arabia is increasing the premium on all grades of its crude for delivery to Asia, Northwest Europe and the Mediterranean. The premium relative to the Oman/Dubai benchmark for the flagship Arab Light grade will rise 45% to $ 2.9 per barrel. ⠀ Usually, the Saudis raise prices when they feel the strength of demand, and the dynamics of China confirms this. Analysts at Citi Research expect OPEC+ to maintain production cuts until the second half of the year at its regular meeting on June 1, so prices above $90 are quite realistic. ⠀ Such an upward spurt requires a confident breakdown of the $80 level and the strong defence zone at $83.50, but judging by the dynamics of interest in buying on the part of major participants, this mission is quite feasible. You can start now.
