TOUGH FIGHT FOR OIL BULLS

OPEC+ Meeting Expectations

Oil’s Q3 rally relies on OPEC’s magic. OPEC+, led by Saudi Arabia and Russia, cut production, aiming for $100 per barrel. However, challenges emerge as Asia’s crude oil imports dip and market enablers contemplate production adjustments in the October 4 meeting.

Saudis’ Dilemma and Chinese Demand

The Saudis, wary of the property slump, falling exports, and youth unemployment in China, may need to produce more to meet demand. Despite their production cut, Saudi Arabia’s cautious pricing strategy reflects worries about Chinese demand in the remaining months of 2023.

Pressures on Saudi Arabia and Russia

Despite OPEC sources suggesting production targets will remain, pressure builds on Saudi Arabia and Russia. The need to ease production cuts arises for year-end deliveries. Concerns over high prices and maintaining market share, especially in China, persist. Chinese economic indicators, though mixed, raise questions about sustained fuel demand.

Russia’s Fuel Export Ban

Russia, committing to the Saudi production squeeze, eases its fuel export ban but faces challenges. The ban’s impact on refinery runs prompts expectations of a rollback. While Russia seeks to keep up with promised deliveries, there’s a need for communication with OPEC+. Russia’s formidable buyer India, still buys fuel from Russia while India’s imports from Saudi have dipped. WTI crude closed at $82.2 last week. The US Dollar Index looks strong currently trading above $106. Despite a positive outlook for oil price due to production cuts and supply constraints, rising inflation will throw a spanner in the works for oil bulls. The path to $100 may not be an easy upward climb.

Geopolitical Unrest: Israel’s Intensified Actions in Gaza

The geopolitical landscape takes center stage as Israel intensifies its actions in Gaza, declaring war and vowing to dismantle the military capabilities of Hamas. The region has witnessed a surge in violence, with over hundreds of casualties reported. Israel’s formal declaration of war has led to heightened military operations, further escalating tensions. As this situation unfolds, the potential impacts on global markets, particularly oil prices, remain a significant area of concern. Meanwhile WTI Crude is currently trading at $84 per barrel, down from $86 up 3.45% upon Hamas attack. For more insights and analysis, visit Uptrendpicks.com

CHALLENGING ECONOMIC LANDSCAPE SPURS PBOC ACTIONS

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