Oil and the US inventory reports!

 

Oil and $200 Outlook!

Yesterday, oil prices eased slightly. After testing 7 years high above $83, gave up the gain to test daily low at 81.22 US dollars per barrel. Brent crude oil ended its 3-day continuous rise to drop more than 2.3% to 83.35 US dollars per barrel and was still under pressure before return in today’s EU season. After stabilization and rebound in August, WTI and Brent crude oil have recorded an increase of about 30% to print 3 and 7 years high prices.

As reports say, the coldest winter in history is coming and natural gas prices are soaring. Already we have a shortage in the Gas supply. With all these problems in mind, we should not forget that OPEC maintained its original plan instead of expanding production, and the United States shale oil production expansion was blocked. Many gas users also already switched to oil, so global crude oil demand will increase by 500,000 barrels per day. Therefore, industry insiders believe that WTI can test the historical price above $100, by year-end. Also, it will be interesting to know that, the US options market also shows that investors are betting that Brent crude oil to soar to a record high of $200 in 2022 December, which is nearly 140% higher than the current price!

According to Goldman Sachs Global Commodity Research Director Currie, this September, the gap of crude oil output was 4.5 Mbd. This gap is not something that OPEC can fill alone. Goldman Sachs analysts also predict that the crude oil market can face the most painful time in this quarter and even in the first quarter of 2021, which can send the WTI oil prices for this period above $90 – 100.

 

Oil and the US inventory reports
Oil and the US inventory reports

 

According to Goldman Sachs Global Commodity Research Director Currie, this September, the gap of crude oil output was 4.5 Mbd. This gap is not something that OPEC can fill alone. Goldman Sachs analysts also predict that the crude oil market can face the most painful time in this quarter and even in the first quarter of 2021, which can send the WTI oil prices for this period above $90 – 100.

While we have the Opec+ meeting on November 4, with increasing tensions in the market, we have vespers that consumer countries may put political pressure on the organization. Already we have reported that some countries are planning to protect vulnerable industries from this hit. At the same time, increasing the Oil price directly will affect all other markets by increasing the producer price index. This increasing inflation with the current increasing demand can cause stagflation. These worries made the US, Japan, and some other countries ask for higher production from OPEC and its allies.

Today we are waıtıng for API report and market expectıng to see that US inventories increase by 2.233Mb in the week ended October 16. Tomorrow also we have to follow the EIA report closely. In case of increasing US inventories, we can see that Oil market bulls to calm a bit, however it cannot change the direction.

From the technical point of view also this increasing possibility is so clear in the Daily chart. Above $69.25, where the 20&50 DMA crossed each other, the EMA crossing strategy also supported the bullish signals. RSI at 75 and increasing OBV trend line also support the idea to remain bullish.

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