Oil extends its gain to 10-month high on peak rates
2023-09-15
Summary:
Oil prices surged to a 10-month peak on China's cash reserve cuts to boost its economy and signs of global tightening cycles nearing their conclusion.
Oil prices rose to their 10-month high, after China cut banks' cash reserve requirements in a bid to revive its economy, and on expectations that major global tightening cycles were nearing their end.
The ECB raised interest rates to an all-time high but signalled It had nearly done its job. The Fed and the BOE will meet next week with the former expected to keep its policy on hold.
However, the recent rebound in energy prices has raised concerns that ‘high for longer’ argument will be validated and inflict more pains on wobbly economy.
Hedge funds have been buying Crude Oil futures for the past two or three weeks as supply woes have been outweighing dire economic outlook and rising US crude inventories.
The OPEC saw solid demand and pointed to a 2023 supply deficit if production cuts are maintained its updated forecast.
The IEA expects Saudi Arabia's and Russia's extended oil output cuts to result in a market deficit through the fourth quarter but it warned that peak fossil fuel demand will manifest itself this decade.
If WTI manages to steady above $90, its upside momentum could gain traction leading to further gains. The EMA 50 continues to be a key support level to watch.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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