In the last month of summer, the oil exchange rate is likely to show a correctionIn August, the oil price depends on several important factors - first of all, the recovery of the market in the United States and the new flare-up of the conflict in the Middle East. The Israeli authorities have accused Iran of attacking an oil tanker, and the United States and Great Britain have already promised support to Israel. Against this background, the oil exchange rate moved to growth after a short correction, but it is not known how long this recovery growth will be. We offer a traditional analysis of oil prices.Reducing unemployment in the United StatesIn many ways, the positive movement on the US stock markets has a positive effect on the oil exchange rate: the S&P 500 and NASDAQ 100 indices traditionally update historical highs. According to data from the US Department of Labor, the number of applications for unemployment benefits has fallen sharply.During the last week of July, only 385 thousand such appeals were registered, and the total number of recipients of benefits amounted to 3 million people. However, the effect of positive news from the US markets has already been played out, and the dynamics of the oil exchange rate will need new incentives to continue growth.At the same time, macroeconomic statistics from the United States show an increase in the commodity deficit, which increased from $71 billion in May to $75.7 billion in June. This was largely due to a 2.1% increase in imports compared to the previous month, although exports increased by only 0.6%. This is largely due to a reduction in supplies, which in turn restricts production within the United States.There are already reports about how the spread of a new strain of coronavirus can affect the American economy. In particular, as the president of the Federal Reserve Bank of Minneapolis, Neil Kashkari, said, the new strain may slow down the recovery of the labor market. This completely contradicts the recent statement by Fed Chairman Jerome Powell, who assured analysts that the delta strain is not a risk to the American economy.Positive statistics on the labor market may force the Fed to change its approach to monetary policy and increase rates, as well as curtail the quantitative easing program. First of all, this will lead to a strengthening of the dollar, which in turn will affect the commodities denominated in the US currency. In this case, the oil exchange rate will be influenced by another important negative factor. Moreover, investors will begin to withdraw resources from risky assets, and then the Russian and Chinese stock markets will suffer.Already half of the US states have stopped paying increased unemployment benefits, which on the one hand indicates that there is no need for additional incentives, and on the other hand may mean an increase in demand for fuel. However, in any case, the statistics on the labor market in the United States may not be as positive as it may seem at first glance - the number of jobs outside agriculture, on the contrary, turned out to be less than a year earlier. First of all, this was caused by a large number of dismissals in the field of higher education.Read more: The history of Federal Reserve (Fed) and its functionsThe influence of China and RussiaAn increase in oil purchases from China can potentially act as a new incentive for the hydrocarbon market. So, China may soon announce an increase in quotas for the purchase of hydrocarbons. Moreover, it is expected that more oil will be purchased not only by small refineries from China, but also by large Chinese companies.The main seller of oil on the Chinese market is the Arab countries from the Persian Gulf, so first, most likely, prices for Dubai grade oil will rise sharply, and other grades, including the benchmark Brent, will follow it. However, these expectations are contradicted by the increase in the incidence of coronavirus in China - due to lockdowns and restrictive measures, traffic on some of the most important logistics routes is reduced.Moreover, the Chinese authorities have decided to restrict air and rail travel around the country. In the Asian region, the number of infected people has been growing recently. In particular, in Thailand, even new restrictive measures did not help to stop the increase in new cases. Similarly, in Sydney, Australia, the increase in new cases has reached a historic high, and the authorities expect the situation to worsen further.In turn, Russian oil companies are trying to use the OPEC+ deal to get more favorable working conditions inside the country. In particular, they suggested that the government reduce the tax burden on the industry, which in turn will help start the development of hard-to-reach oil. To do this, they proposed to create two new groups of deposits, for which they proposed to reset the tax on mineral extraction.The first group includes areas with the volume of initial reserves of less than 65 million tons and the degree of depletion of less than 1%. The second group includes the deposits of ultra-viscous oil in the Komi Republic. Moreover, the oil companies decided to stimulate the exploration of hard-to-recover reserves. To do this, it is proposed to use a traditional set of tools - tax deductions and reduction of payments for the mineral extraction tax. However, so far the Ministry of Finance is against the initiative, which is not eager to help oil companies and does not plan to change the taxation of the industry until 2023-2024, until the end of the OPEC+ agreement.At the same time, the further deterioration of the pandemic situation in the world may become a deterrent to the growth of oil prices. Recently, in order to combat the spread of a new delta strain of coronavirus, an increasing number of countries have been strengthening restrictive measures on the mobility of the population. Investors are particularly concerned about the situation in China, where domestic air and rail traffic was limited in order to localize outbreaks of the disease, which directly affects the oil exchange rate.Oil price analysisOil futures moved into the negative zone, without reaching the goals of a short-term rebound. These levels are located near the $73.50 and $71.50 marks, which corresponds to the average Bollinger bands on the daily chart. In general, the oil exchange rate is affected by downward pressure, and analysts are increasingly inclined to believe that a correction may occur in the hydrocarbon market in the near future. The support lines are located near the previous lows - around $70.20 and $67.50, according to the technical analysis of oil prices.Read more: What are futures: types, features, advantages and risksIn the first week of August, the dynamics of the oil exchange rate showed a failure-from about $75 to $70 literally from August 2 to 5. The reason for the increase is quite banal - the growth of fuel reserves in the American market, which indicates a decrease in economic activity. According to official data, inventories increased by 3.6 million barrels, while a decrease of 3.9 million barrels was expected. Moreover, analysts are influenced by data on the spread of a new strain of coronavirus in China, the United States and Japan, as well as the associated expectations of new restrictions.The most important factor that positively affects the dynamics of the oil exchange rate remains the growth of tensions in the Middle East. The conflict between Israel on the one hand and Iran and Lebanon on the other threatens the rapid exit of hydrocarbons from the Islamic Republic to foreign markets, as well as generally increases the uncertainty of oil transportation from the Middle East. As a result, literally in one day on August 5, the oil exchange rate recovered to $71 per barrel, and the next day it was already testing the level of $72 per barrel.A new conflict in the Middle East may become a significant factor that is likely to affect the oil price in August. According to Israeli Defense Minister Beni Gantz, his country is ready to start a war against Iran because of a drone strike on an oil tanker. We are talking about the attack on the Mercer Street oil tanker.Officially, the ship belongs to Japan, sails under the flag of Liberia, but it is operated by the Israeli company Zodiac Maritime. According to Gantz, the Islamic Republic has no more than two and a half months to come close to producing nuclear weapons. In this context, the attack on an Israeli tanker becomes part of a large-scale confrontation in the region. If the tension increases, the oil exchange rate may receive additional support.In turn, Israel has already received assistance from its traditional allies - the United States and Great Britain. As British Prime Minister Boris Johnson hastened to say, " Iran must answer for the consequences." In turn, the representative of the Iranian Foreign Ministry, Saeed Khatibzadeh, said that the Islamic Republic is ready to protect its security and national interests. US Secretary of State Anthony Blinken also joined the diplomatic skirmish, saying that Tehran was undoubtedly behind the attack, and the allies would prepare a "collective response" to this attack.Thus, two multidirectional factors: the strengthening of anti-bullying measures and the growing conflict in the Middle East are pushing the trajectory of the oil exchange rate in different directions. If the first factor leads to a reduction in demand, the second one seriously reduces the supply of oil - it is the Middle East conflicts that traditionally push the cost of hydrocarbons up. According to most analysts, the combination of two multidirectional factors can cause the oil exchange rate to fluctuate in a wide range from $68 to $75 per Brent, depending on the news background.Read more: Are the minutes of the Federal Reserve meetings useful for ...
EUR/USD: the pair is moving within the 1.0350–1.0000 channelThe quotes of the EUR/USD pair are in the correction phase, trading around the 1.0305 mark against the background of the weakening of the US currency. After a poor start to the year, the euro is regaining its position, receiving support from the publication of macroeconomic data.Today, key eurozone countries continue to provide information on inflation. In December, the consumer price index in France was 1.3%, remaining at the level of the previous month and coinciding with analysts' expectations. In Spain, inflation accelerated to 2.8% from the previous 2.4%. The consolidated indicator for the eurozone is projected to grow by 0.4% month-on-month and reach 2.4% year-on-year, exceeding the November level of 2.2%. At the same time, the base index, which excludes the cost of food and energy resources, is likely to be fixed at 0.5%. Increased inflationary pressures may adjust the policy of the European Central Bank (ECB), forcing it to reconsider plans to lower interest rates or slow down the pace of their reduction.Support levels: 1.0230, 1.0030.Resistance levels: 1.0350, 1.0530.NZD/USD: New Zealand and the UAE have signed a partnership agreementThe New Zealand dollar is aiming to stay above the 0.5600 level during Asian trading on January 15. The national currency is supported by statistics on the business confidence index provided by the New Zealand Institute of Economic Research (NZIER). According to the report, the indicator for the fourth quarter increased by 16.0%, offsetting the previous decrease by -1.0%.Earlier, the strengthening of the New Zealand currency was driven by positive data from the construction sector and China's foreign trade. The number of building permits in New Zealand increased by 5.3%, which fully offset the 5.2% decrease a month earlier. Meanwhile, exports from China grew by 10.7% year-on-year after the previous growth of 6.7%, significantly exceeding analysts' forecasts of 7.3%. Imports increased by 1.0% after falling by 3.9%, which contributed to an increase in the trade surplus from $97.44 billion to $104.84 billion, against expectations of $99.8 billion.In addition, representatives of New Zealand and the UAE signed a comprehensive economic partnership agreement aimed at increasing trade and investment flows. According to forecasts, the deal will allow to reach a trading volume of 5.0 billion dollars by 2032, providing an annual average of 1.5 billion dollars. At the same time, in the first nine months of last year, the non-oil trade turnover between the two countries amounted to 642.0 million dollars, which is 8.0% higher than the same period in 2023.Resistance levels: 0.5607, 0.5641, 0.5672, 0.5700.Support levels: 0.5571, 0.5540, 0.5511, 0.5467.USDX: dollar loses ground ahead of inflation reportThe US dollar index (USDX) shows mixed sentiment, being near the 109.00 mark and testing it for a breakdown down. Yesterday, the index showed a moderate decline, continuing to adjust from the highs reached earlier in the week. The main driver of the "bearish" dynamics was weak statistics from the United States, which increased doubts about today's inflation data and lowered expectations of new changes in the Fed's monetary policy in 2025. In particular, the producer price index for the month fell from 0.4% to 0.2%, although it was predicted to remain at the same level, and year-on-year the indicator increased from 3.0% to 3.3%, but was lower than the expected 3.5%. At the same time, the base value decreased to 0.0% from the previous 0.2%, maintaining the annual dynamics at 3.5%.Forecasts for consumer inflation suggest that the monthly rate will increase from 0.3% to 0.4%, and the annual rate from 2.7% to 2.9%, while the base value is likely to remain between 0.3% and 3.3%. Such data may signal a slowdown in the pace of the Fed's dovish policy. Central forecasts with a 97.3% probability assume that the interest rate will remain in the current range of 4.25%-4.50%, especially given Donald Trump's policy of reforming import duties, reducing the tax burden and tightening immigration rules, which may increase inflationary pressures.In addition, the monthly economic review of the US Federal Reserve "Beige Book" will be released today at 21:00 (GMT+2). The document covers 12 federal districts, providing up-to-date information on the state of industry, agriculture, corporate and consumer spending, the real estate market and other sectors of the economy.Resistance levels: 109.50, 109.97, 110.40, 111.00.Support levels: 109.00, 108.50, 108.00, 107.50.Crude Oil market analysisBrent Crude Oil prices continue to move within the framework of the local uptrend, remaining above $ 79.0 per barrel during the Asian session. The market is gradually recovering, but participants remain concerned about the possible consequences of new US sanctions that could affect Russian oil supplies to China and India, as well as the overall supply level on the global energy market.The quotes support the latest forecasts of the Energy Information Administration of the U.S. Department of Energy (EIA), according to which global oil production could reach 104.36 million barrels per day in 2025 and increase to 105.89 million barrels in 2026. At the same time, global demand is expected to decrease to 104.1 million barrels per day in 2025 and to 105.15 million in 2026, which will create an oversupply of 260 thousand barrels and 740 thousand barrels, respectively. This will be in contrast to the deficit of 170,000 barrels recorded in 2024. According to experts, the main increase in production is expected in non-OPEC+ countries such as the United States, Canada, Brazil and Guyana.Support levels: 78.30, 74.80.Resistance levels: 80.70, ...
GBP/USD: pound dominates, dollar loses groundThe quotes of the GBP/USD pair continue to strengthen, reaching the level of 1.2533, against the background of the weakening of the US currency.S&P Global business activity data for December supported the pound, despite the fact that the figures are still far from forecasts. The index of business activity in the UK services sector increased from 50.8 to 51.1 points, which pushed the composite indicator to 50.4 points. This indicates continued growth, even despite the Labor government's plans to raise taxes. In response to the increasing pressure, businesses are preparing to raise prices and reduce investments. An additional positive factor was the improvement in retail sales: the index calculated by the British Retail Consortium (BRC) showed an increase from -3.4% to 3.1%. Such dynamics has not been observed since March 2024, when the indicator reached 3.2%.The US currency, on the contrary, showed a significant decline, falling to the level of 108.1 in the USDX index. Analysts' expectations for an improvement in activity in key sectors of the US economy have not been met. The index of business activity in the service sector rose from 56.1 to 56.8 points, but was lower than the projected 58.5. The composite indicator adjusted from 54.9 to 55.4 points instead of the expected 56.6. A slowdown in the national economy may prompt the US Federal Reserve to temporarily freeze monetary policy changes. This is confirmed by CME Group FedWatch data: the probability of maintaining the current interest rate increased from 88.6% to 92.5%.Support levels: 1.2460, 1.2300.Resistance levels: 1.2580, 1.2770.USD/CHF: monetary policy supports the pair's growthThe USD/CHF pair maintains an upward trajectory despite the recent correction. Last week, the quotes reached a nine-month peak at 0.9135, but then retreated to 0.9033 (the Murray level [2/8]). The decline is expected to be temporary, as monetary factors continue to support the pair's growth in the medium term.The Swiss National Bank is likely to maintain a dovish approach this year, lowering borrowing costs to offset a sharp slowdown in inflation, which is putting pressure on the domestic economy. According to December data, the annual consumer price index decreased from 0.7% to 0.6%, remaining below the target range of 2.0%, which reinforces the need for further easing. The head of the Swiss regulator, Martin Schlegel, previously admitted the possibility of negative interest rates, although he stressed that this was not the main strategy.At the same time, the US Federal Reserve is demonstrating a more restrained approach to changing monetary parameters, given the growing inflationary risks associated with the tax and trade policies of the administration of President-elect Donald Trump. At the December meeting, officials cut the forecast for the number of interest rate cuts this year to two instead of four. Fed officials such as Adriana Coogler and Mary Daly point to the need to continue fighting inflation, which may slow down the pace of policy easing, strengthening the position of the US dollar.Resistance levels: 0.9155, 0.9277, 0.93 99.Support levels: 0.8970, 0.8789.USD/CAD: resignation of Canadian Prime Minister shocks marketsThe USD/CAD exchange rate continues to decline, breaking the support level of 1.4350, which signals a possible further deepening of the downtrend. The political instability in Canada is in the focus of market participants' attention.Prime Minister Justin Trudeau has announced his intention to leave office after the election of a new leader of the Liberal Party, which is accompanied by a temporary suspension of parliament. This decision came shortly after a meeting with US President-elect Donald Trump, who criticized the Canadian authorities for the increase in illegal migration and smuggling, as well as for the significant trade imbalance. Trump noted that the trade deficit with Canada is about $ 100 billion, and warned of the possible imposition of duties of 25% on exports if the situation does not change by his inauguration on January 20.Additional pressure on the pair's exchange rate is exerted by the weakness of the US dollar caused by the publication of macroeconomic statistics. The index of business activity in the services sector, calculated by S&P Global, increased from 56.1 to 56.8 points in December, but turned out to be significantly lower than analysts' forecasts (58.5 points). The composite index also showed a more modest increase, from 54.9 to 55.4 points, which is worse than the expected level of 56.6 points. In addition, the volume of industrial orders decreased by 0.4% in November, confirming the continuing difficulties in the American economy.Resistance levels: 1.4466, 1.4550, 1.4665.Support levels: 1.4150, 1.3950.Crude Oil market analysisIn Asian trading, Brent crude oil continues to adjust within the framework of the local uptrend, holding above the level of 76.0 dollars per barrel.Prices were supported by news about the increase in selling prices for energy resources with February deliveries to customers from Asia, Northern Europe and the Mediterranean. In particular, the cost of KSA's flagship brand Arab Light increased by 0.6 dollars for Asian customers and by 1.3 dollars for customers in Europe. These changes followed OPEC+'s decision to extend the voluntary reduction in oil production until the end of March 2025, taking into account changes in energy supplies to Asia from Russia and Iran amid sanctions.The market was also influenced by the statement of the US President-elect Donald Trump about his intention to lift the current ban on the development of oil fields in coastal areas. Trump has designated this decision, which affects an area of 625 million acres, as one of the key priorities of the first days of his presidency. Investors are taking a wait-and-see attitude, assessing the possible consequences of these initiatives.Support levels: 75.40, 72.20.Resistance levels: 77.30, ...
EUR/USD: bearish trend remains in forceThe EUR/USD pair is showing a moderate decline during Asian trading, continuing to develop the downward momentum formed earlier: quotes are testing the 1.0400 level again, declining from local highs on December 18. The activity of market participants and transaction volumes are gradually weakening, which is associated with the approach of the Christmas and New Year holidays, against which investors are taking a wait-and-see attitude.Pressure on the euro remains due to the current monetary policy of the European Central Bank (ECB) and recent comments by the head of the regulator, Christine Lagarde, in an interview with the Financial Times. She expressed concern about the continued rise in prices in the service sector, which remains at around 4.0%. Lagarde also spoke out against possible EU retaliatory measures to impose additional duties from the United States, pointing to their potential negative effect on households and businesses. Against the background of such statements, market participants are reviewing expectations for the rate of interest rate cuts in 2025, but questions about the pace of economic recovery remain open. In December, the ECB cut its key interest rate again by 25 basis points. November inflation accelerated from 2.0% to 2.3%, and forecasts suggest it will rise to 2.4% in 2024 and 2.1% in 2025, followed by a decline to 1.9% in 2026, which is below the target level. Additionally, the ECB confirmed its intention to continue reducing its bond portfolio under the PEPP program by 7.5 billion euros per month.Resistance levels: 1.0400, 1.0450, 1.0500, 1.0554.Support levels: 1.0350, 1.0300, 1.0253, 1.0200.GBP/USD: the pair is moving down, reflecting the medium-term bearish dynamicsIn December, the GBP/USD pair resumed its downward movement within the framework of a medium-term downtrend, testing the level of 1.2490, corresponding to a 50.0% Fibonacci retracement. The pressure on the pound increased after the release of macroeconomic data, which reflected a slowdown in economic activity in the UK.In particular, the gross domestic product (GDP) did not change in the third quarter, contrary to analysts' expectations, which assumed an increase of 0.1%. Industrial production also decreased by 0.7% in October, and the aggregate business activity index fell to 50.5 points, due to business concerns about the growing tax burden initiated by the Labor government. As a result, the country's economy may enter a state of technical recession. At the same time, inflation remains at a high level: in November, the consumer price index was 2.6%, and the base index rose to 3.5%. In such a situation, the Bank of England is unable to continue its soft monetary policy, which limits the incentives for economic recovery and increases pressure on the British currency.Resistance levels: 1.2695, 1.2939, 1.3061.Support levels: 1.2490, 1.2300, 1.2095.USD/CHF: Swiss authorities' investigation reveals reasons for Credit Suisse collapseThe USD/CHF pair is showing a steady upward trend in the morning, developing the momentum that began the day before, and is striving to overcome the 0.8990 level. Despite the low activity in the market ahead of the Christmas holidays, the main attention of bidders is focused on the outcome of the US Federal Reserve meeting, where interest rate changes were discussed.Last week, Switzerland presented statistics on foreign economic activity: exports in November decreased from 27.83 billion to 23.68 billion francs, imports — from 19.80 billion to 18.26 billion francs, which led to a decrease in the trade surplus from 8.025 billion to 5.424 billion francs. On Friday, the bankruptcy report of Credit Suisse Group AG, prepared by the parliamentary commission, was published. The 569-page document contains 30 recommendations for preventing similar crises in the future. Among the proposals: expanding the powers of FINMA, tightening capital requirements for systemically important banks, and introducing a resident qualification for members of the board of directors. The Committee noted that the mistakes of the Credit Suisse management were the key cause of the crisis: from 2010 to 2022, top managers were paid 39.8 billion francs in bonuses, despite cumulative losses of 33.7 billion francs. Additionally, it is indicated that the regulator unreasonably provided capital allowances in 2017, which prevented the timely identification of the bank's financial problems. The Government is invited to consider measures aimed at preventing similar situations in the future.Resistance levels: 0.9000, 0.9037, 0.9100, 0.91 30.Support levels: 0.8957, 0.8929, 0.8900, 0.8865.Crude Oil market analysisBrent Crude Oil prices are trading near the level of 72.00, showing sideways dynamics against the background of changes in global demand for energy resources.According to the latest report from the US Energy Information Administration (EIA), India will become the leader in hydrocarbon consumption in 2024, overtaking China. Forecasts show that India could reach 220,000 barrels per day next year, increasing it to 330,000 barrels per day in 2025. At the same time, China, against the background of an accelerated transition to renewable energy sources, will reduce the growth rate of demand to 90 thousand and 250 thousand barrels per day for the same periods. If in 2023 China accounted for up to 70% of global oil demand, then in 2024 the figure may fall to 20%, while India's share will grow to 25%. Already this year, India has taken a leading position in the supply of petroleum products to the EU, surpassing even the United States.Resistance levels: 73.50, 77.00.Support levels: 71.60, ...
EUR/USD: the regulator in the USA adjusted the rate by 25 bp.The EUR/USD pair continues to adjust, trading around 1.0375 amid the strengthening of the US dollar and growing expectations of further monetary easing by the European Central Bank (ECB) after the published data on a decrease in inflation.In November, the consumer price index in the eurozone fell from 0.3% to -0.3% on a monthly basis, and increased from 2.0% to 2.2% on an annual basis, which turned out to be lower than forecasts of 2.3%. The basic indicator excluding energy and food products fell from 0.2% to -0.6% on a monthly basis and remained at 2.7% on an annual basis. These results strengthen the case for continued rate cuts, which puts pressure on the euro.The US dollar strengthened to 107.80 on the USDX index after the decision of the US Federal Reserve to cut the rate by 25 basis points to a range of 4.25–4.50%. In addition, the regulator presented revised forecasts: inflation in 2024 is expected to reach 2.4% against 2.3% earlier, in 2025 — 2.5% instead of 2.1%. The GDP growth forecast has been improved to 2.5% in 2024 and 2.0% in 2025. The average rate by the end of 2025 is expected to be 4.4%, and in 2026 it will decrease to 3.9%, which is higher than previous estimates. In his statement, the head of the Fed noted that the US economy remains stable, the labor market is cooling, and inflation has slowed significantly over the past two years, although it exceeds target levels. He also stressed that the risks to inflation are generally balanced, but the current dynamics may include temporary factors.Resistance levels: 1.0410, 1.0580.Support levels: 1.0330, 1.0180.GBP/USD: UK has joined the CPTPP Economic AllianceDuring morning trading, the GBP/USD pair is held at 1.2590, partially recovering the losses incurred the previous day. The increase in quotations is due to technical factors, but traders are taking a wait-and-see position before the announcement of the results of the Bank of England meeting scheduled for 14:00 (GMT+2). According to analysts, the regulator's management will probably decide to leave the key rate at 4.75%, with eight of the nine board members supporting this decision.Wednesday brought disappointment in the form of inflation data: the consumer price index rose from 2.3% to 2.6% in November, and the base indicator increased from 3.3% to 3.5%, which slightly exceeded forecasts. Such dynamics signal the possibility of further revision of monetary policy by the Bank of England if inflationary pressure persists or increases in the coming months.On December 15, the United Kingdom completed the process of joining the Trans-Pacific Partnership, becoming a full participant in it. Within the framework of the alliance, the country waived import duties on palm oil from Malaysia, and also facilitated a number of procedures for trade with other members of the agreement. This step underlines London's desire to strengthen international economic ties and develop partnerships with 11 other member states of the association.Resistance levels: 1.2600, 1.2650, 1.2700, 1.2730.Support levels: 1.2550, 1.2500, 1.2450, 1.2400.Silver market analysisAfter a long period of consolidation above the 30.00 mark, the XAG/USD pair fell below this level, which is due to the strengthening of the US currency.The decline in silver prices is taking place against the background of the "dovish" rhetoric of the US Federal Reserve System. Each step to lower the interest rate, accompanied by statements by Fed Chairman Jerome Powell, puts pressure on the metals market. Powell stressed that the American economy is showing stability, and the forecast for GDP growth at the end of 2024 has been raised to 2.5% against the previously expected 2.0%. Moreover, the regulator is considering the possibility of a temporary pause in the cycle of monetary policy easing in order to strengthen control over inflation and bring it to a level below 2.0%. Such steps reduce the attractiveness of precious metals as a protective asset in conditions of stabilization of the economic situation.On December 18, the volume of silver futures trading decreased to 50.0 thousand, which is significantly lower than the maximum values of December 11 and 12 — 126.0–127.0 thousand. A similar reduction is observed in the option position, which yesterday amounted to 8,145 thousand, down from a peak of 22,706 thousand last week. This may indicate that market participants are not confident that silver prices will continue to rise and prefer to close positions, waiting for clearer signals for further action.Resistance levels: 30.00, 31.40.Support levels: 29.00, 27.40.Crude Oil market analysisBrent Crude Oil prices are showing a sideways trend, remaining slightly above the level of 72.00. The instrument was under pressure due to the growth of the US currency, which reached an annual maximum after the US Federal Reserve lowered the interest rate by 25 basis points and improved forecasts for economic growth by the end of the year.Investors drew attention to the agreement concluded between the Russian company Rosneft and the Indian giant Reliance Industries Ltd. The document provides for the transportation of 500.0 thousand barrels of oil daily to India for ten years, starting in 2025, which makes this deal the largest for the region. The implementation of the project will cover a significant share of Indian demand for hydrocarbons, and processed raw materials will probably be supplied to the countries of the European Union, filling the market deficit caused by sanctions against the Russian energy sector related to the conflict in Ukraine.Support levels: 71.23, 67.61.Resistance levels: 75.38, ...
OPEC+ is markedly reducing oil production - in fact, the exporting countries will pump about 1 million barrels less per day. We have written earlier on why this is so.As a result, supply at the market has become lower, so prices have gone up and are approaching $100 per barrel again.What will the U.S. do after the OPEC+ statement?The coming energy crisis and the high inflation it causes are scaring the whole world, but it's the States that are worried the most right now:expensive oil means expensive fuel;it's causing prices of almost all commodities to rise;inflation is going up - the Fed keeps tightening policy;high key interest rates are pushing the U.S. closer to recession;in addition, high fuel prices can cause social discontent.To prevent this, the U.S. is trying to influence the largest oil producers and keep prices down. Otherwise, the Democrats will most likely not win the congressional elections. They are due in a month.The U.S. started to prepare in advance: President Biden flew to Saudi Arabia this summer and persuaded the U.S. to bring down oil prices. But it did not work out very well: OPEC acts in its own way and does not want to listen to Americans. As a result, the failed negotiations with the Saudis have further diminished the credibility of Biden and the Democrats' ability to influence oil, inflation and economic stability in the United States.However, the Biden administration is not giving up; they have a few more options - rather radical ones - on how to lower oil prices.Additional Oil ReleaseThe safest, though least effective, option is to further draw oil from strategic U.S. storage facilities. In response to OPEC+'s decision to cut production, Biden announced that the U.S. would release 10 million barrels of oil, even as storage reserves are depleted.That would be all well and good, but the announcement had little or no effect on oil prices, especially compared to the previous similar decision to release 180 million barrels to the market. No wonder: the volumes are not comparable.In addition, since U.S. storage reserves are running out, there is a risk that they will not be enough for a rainy day: in case of sharp reductions in domestic production (for example, during hurricanes in the Gulf of Mexico) or imports (if OPEC+ countries reduce exports).Reducing military aid to the ArabsDemocrats have drafted a "Tense Partnership" bill in response to OPEC+ and specifically the alliance's leaders, Saudi Arabia and the UAE. They are accused of "a hostile act against the United States" and "siding with Russia in the conflict with Ukraine."As revenge, the U.S. could withdraw its troops from these countries and stop supplying weapons and other military aid to fight neighboring states and terrorists. This includes protecting oil infrastructure from attack.This option also has disadvantages: without U.S. military support in these countries, there could be problems that would inevitably affect the global oil supply. After all, if military actions or terrorist attacks affect the oil fields or storage facilities of Saudi Aramco, oil will cost even more, and such attacks occur quite often.So even if the Saudis and the UAE will not reduce exports in response to the withdrawal of troops and reduction of arms supply, there is a good chance that sooner or later the fighting will make prices go up.In addition, Saudi Arabia has already planned to prepare for a possible conflict with the United States. For example, in the spring the Saudis said they were going to explore ways to move away from the petrodollar - that is, not to use bucks in the black gold trade. In this case, the demand for the dollar could fall dramatically, especially if other oil-exporting countries do the same.NOPEC: Conflict with OPEC+Amid disagreements with OPEC, the U.S. may return to the "oil production and export cartel law," NOPEC, to have more leverage on oil exporters.In this case, U.S. courts will be able to consider antitrust suits against OPEC+ and in general against countries involved in cartel collusion in the oil market. Under the decision of their own courts, the U.S. will be able to impose sanctions, confiscate property of these countries and put pressure on them in other ways. At the same time, the U.S. itself will indicate what is legal and what is not, thus assessing any actions of the countries that regulate oil production and prices.This option also has a disadvantage: sanctions on exporters would also hit the U.S. itself. If oil prices become lower, the U.S. oil industry will also be hard hit: domestic production will decrease and it will have to import more. And since the market is competitive, and the U.S. in this case will be "enemies of OPEC +", they will have to buy oil more expensive.So, even if the U.S. takes a drastic step - provoking a conflict with Saudi Arabia or the UAE, or starting a sanctions war with OPEC+ - all this will have a negative impact on themselves.Can't sanctions be lifted on Venezuela?As we can see, the U.S. has almost no normal options left to influence the oil market. Nevertheless, the U.S. says it is not going to remove sanctions from Venezuela yet, despite the fact that this would help get more oil on the market and lower oil prices. We may see some new rhetoric in this regard, but no change for now.The Iran deal has also been stalled so far: there is no news or movement on it. Although it is possible that disagreements with the Saudis may attract the U.S. to support Iran, because these are the two sides of the Arab conflict.On the one hand, Iranian oil would help to increase supply, but there is a nuance here as well: the reserves in this country are not grandiose, moreover, most of the oil is already exported in circumvention of sanctions.So what to do with Brent and WTI crude oil prices in 2022?If we discard all of the above options, then all we have to do is sit back and watch oil go up in price. The outlook is also bad: even if the world starts a recession and the demand for oil decreases, OPEC+ is already reducing production and adjusting to negative expectations, and also the supply from Russia may decrease if the embargo comes into force.And if that's the case, U.S. inflation will be high. And given the strong labor market, the Fed may raise the rate even more than 1.25% by the end of the year, and it is not certain that it will slow down next year as well. If rates remain high for a long time, the risk of recession in the U.S. is very high, and stocks and cryptocurrencies will have no fuel for growth. As a result, the economy will have a hard time: liquidity is scarce.If the U.S. starts to act sharply, the dollar is at risk: the "oil" countries can give it up to reduce dependence on the United States. But if the U.S. does nothing, tightening Fed policy will keep the dollar very strong - though at the cost of high inflation and recession. 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In 2019, the "sub-sanctioned" Iran began to increase oil supplies in circumvention of sanctions. Mostly tankers went to China and the Mediterranean: Syria and Turkey. And by the beginning of 2022, the fleet for transporting sanctioned Iranian and Venezuelan oil had tripled. It accounted for approximately 400 million barrels per year. And such a "ghost armada" successfully undermines the business of transport companies.Why did Iranian tankers get such a name?Last year, The Mail on Sunday reported: 123 Iranian vessels circumvent sanctions on oil trade. They change their location to GPS and create the appearance that they are anchored at sea, but at this time they are loading/unloading at the port. They also actively forge documents, use flags of different countries, disable identification systems and use front companies. Oil is often loaded onto several vessels and mixed before reaching its destination. This is also the case with "toxic" Russian oil.At the same time, Iran has a whole "underground" financial system for trade bypassing sanctions, writes the WSJ. It includes accounts in foreign banks, intermediary companies outside the country and firms that coordinate prohibited trade. The annual turnover is estimated at tens of billions of dollars.And Iranian banks attract affiliated firms to manage trade under sanctions. They register "daughters" outside the country, become trusted for Iranian traders, and then trade with foreign buyers of Iranian oil in foreign currency through accounts in foreign banks.Will the "Iranian Armada" help Russia?She is already helping her to circumvent sanctions, writes the Daily Mail. The international non-profit organization United Against Nuclear Iran (UANI) accuses the Iranian navy of cooperating with Russian oil companies. Allegedly, Russian oilmen are using "Tehran's black market vessels" to circumvent the export ban. And the US, the EU and the UK are even calling for the formation of a team of "ghostbusters".At least 5 Iranian "ghost armadas" are transporting oil from Russia to China and India, according to UANI. And recently, the WSJ reported that Zamanoil from the UAE was linking Iranian and Russian oil workers. The US Treasury accused her of working with the Russian government and Rosneft on the supply of Iranian oil to Europe.However, at the end of March, Iran denied a "secret offer from Russia" to help it circumvent sanctions in exchange for support in concluding a nuclear deal. And in May, he noted that he could not be a competitor of Russia in the global oil and gas market. The country has its own regular customers, and Iran sells the maximum amount of oil.So officially, Iran does not seem to be planning to use its "army of ghosts" to help for the benefit of Russia, despite the fact that these countries have "converged" before. But then there was no question of an embargo on Russian oil and there was no ban on ship insurance. In the new reality, the actions of the "ghost armada" are quite difficult to ...
At the morning trading on Tuesday, oil prices are declining. By 7.42 GMT, Brent oil fell to 72 dollars 85 cents per barrel, or by 0.05% compared to the closing price of trading the day before. The price of WTI oil fell to 71 dollars 22 cents per barrel, or 0.06%. Pressure on oil prices is exerted by information about the deterioration of the epidemiological situation in Asian countries. In this region, there is an increase in the number of infections with a new strain of coronavirus infection "delta". The authorities of a number of Asian countries were forced to tighten restrictive measures, including on movement. Analysts at Commonwealth Bank Of Australia note that the spread of the delta strain around the world will become a serious threat to the recovery of oil demand. Mobility restrictions are already being observed in some parts of the Asian region. This is the reason for the fall in oil demand. More than 60% of the world's oil consumption is accounted for by ...