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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
OIL
- Brent Crude and WTI both marched to fresh YTD highs today with the former briefly topping $82/bbl, despite the recent OPEC+ output increase and expectations for oversupply from the end of 1Q22 (originally Dec 2021).
- Both Crude & WTI time spreads currently diverge from this forecast – reflecting strengthening backwardation in futures as traders instead price in a deficit.
- Goldman Sachs has been extremely vocal in recent months about a commodity super-cycle and the pro-cyclical characteristics of oil markets, placing lofty $100/bbl targets on Brent as market conditions tighten in 2022.
- Markets have been incrementally pricing out omicron-related risks to demand destruction, but uncertainty still remains over the trajectory of the virus and demand from major consumers such as China. Moreover, geopolitical risks between Russia and the West has seen immense volatility in natural gas markets as Russia chokes supply to expedite the rollout of its controversial Nord Stream 2 pipeline.
- Saudi Aramco had also been expected to make deep price cuts for February after Middle East benchmarks and spot prices slumped last month owing to rising supplies. However, sources said the price cuts were still smaller than industry expectations – potentially adding to bullish backwardation vectors.
- With price action back above $80/bbl, focus is on the October highs at $83.69/bbl – which falls just short of the 2018 highs at $86.74. Conversely, key support comes in at $77.04, $76.69 (50ema) & $75.38.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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