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Why are crude oil prices rising? Concerns over Russian supplies 

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Crude oil price and dollar

Crude oil price and the dollar have always been linked. Oil prices rose on Monday amid positive sentiment on stock exchanges and a weakening U.S. dollar. Concerns over Russian supplies also supported the quotations. On the daily chart, the Brent futures form a kind of rising triangle with the upper bound of $107-108 per barrel. A break-up of this boundary might open the way to a further move to the area of $115-116 per barrel.

Why are crude oil prices rising? Russian oil and gas

As you can see, crude oil prices and charts began to rise on the back of recent news. Yesterday it became known that the flow of gas pipeline Nord Stream – 1 will again be limited. This time it is planned to shut down one more gas turbine engine “due to the end of the time between repairs”. Problems with gas supplies are perceived as an escalation of tensions between Russia and the EU in the energy sphere and increase anxiety in the market over Russian hydrocarbon supplies. Against such a backdrop, oil futures buyers are feeling more confident.

The volume of Russian exports is one of the key uncertainties in the second half of 2022 and in 2023. In December comes into force the European embargo on maritime oil supplies from Russia, and in February 2023 on the supply of petroleum products. Whether Russia will be able to avoid production cuts depends on how successful it will be in redirecting supplies to Asia. As of July 15, the average volume of Russian oil supplies to the Asian region was 1.7 million b/d, compared to 1.2 million b/d in January 2022. 1.3 million b/d is still going to Europe, for which new buyers have yet to be found.

Fed meeting

Tomorrow, the U.S. regulator will make an interest rate decision. According to the FedWatch Tool, markets are laying 77% odds that the rate will rise by 0.75pc, with another 23% accounting for 1pc. Even more important will be the Fed’s view of future monetary policy: whether the regulator is willing to raise rates further in an attempt to cool inflation. The more decisive the Fed will be in raising rates, the more the markets will fear an economic recession and a possible cooling of oil demand. Lower demand could make up for capacity shortages and lower prices. Crude oil prices and futures began to rise. 

WTI contracts at $8.5 lower

U.S. WTI discount to Brent by more than $8 a barrel amid cooling U.S. gasoline demand. Gasoline prices have been falling steadily over the past week. The national average price per gallon was $4,355, down from $4,521 a week ago, according to the AAA Automobile Association. Experts expect a $4 per gallon increase in the coming weeks.

Why are crude oil prices rising today? Demand for gasoline cannot be called weak, but it is lower than it was in July of last year. Last week, EIA data showed fuel inventories rising, and that put pressure on prices, even though the rest of the indicators were rather bullish. This week, the dynamics of gasoline inventories in the U.S. may remain the focus of investors’ attention.

As of this morning, Brent futures are up 1.8% and trading around $107 a barrel.



Commodities

Goldman Sachs oil price forecast 2022: Oil price forecast worsens in Q3 and Q4

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goldman sachs oil price forecast 2022

Current Goldman Sachs oil price forecast 2022: Analysts (NYSE:GS) believe another drop in Brent prices has been driven by low liquidity and growing multiple concerns, including the recession, China’s “zero tolerance” coronavirus policy and the country’s real estate sector, the release of strategic reserves in the US and Russia’s production recovery.

“We believe the possibility of higher oil prices remains high, even given all these negative factors, as the market is in a state of greater deficit than we have expected in recent months,” experts said.

Nevertheless, they worsened their forecasts for oil prices in the 3rd and 4th quarters of 2022 – to $110 and $125 per barrel, respectively, from $140 and $130 per barrel. The forecast for 2023 remained unchanged at $125/bbl.

The previous week the price of Brent had fallen by almost 9%; WTI had fallen by almost 10%. At the moment, futures are near the minimum marks for six months.

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Commodities

Why is oil rising in price today after a decline last week

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why is oil rising in price

Why is oil rising in price? The price of October futures on London’s ICE Futures Exchange for Brent amounted to $95.22 per barrel, which was $0.3 (0.32%) above the previous session’s closing price. At the end of previous trading these contracts grew by $0.8 (0.85%) up to $94.92 per barrel.

The price of WTI futures for September at electronic trades on the New York Mercantile Exchange (NYMEX) was $89.26 per barrel at that time, which was $0.25 (0.28%) above the final value of the previous session. By market close on Friday, the cost of these contracts grew by $0.47 (0.5%) up to $89.01 per barrel.

The previous week Brent had dropped almost 9% and WTI had fallen almost 10%. Currently, futures are near six-month lows.

The fall in Brent prices was caused by low liquidity and “a growing wave of concerns,” including the recession. China’s “zero tolerance” policy for the coronavirus, the release of strategic reserves in the U.S. and the recovery of production in Russia, experts wrote to Goldman Sachs (NYSE:GS).

They worsened their oil price forecasts for Q3 and Q4 2022 to $110 and $125 a barrel, respectively, from $140 and $130 a barrel. The 2023 forecast remained unchanged at $125 a barrel.

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Commodities

Nasdaq 100 index rises for third straight week 

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nasdaq chart today

The Nasdaq chart today, which reflects the value of stocks of U.S. technology companies, rose 20% from its June low. Over the past trading week, the Nasdaq showed an increase of 3.2%. Analysts believe that this rally is happening on very shaky ground. 

Some even claim that investors are “stupid”. Much of the growth came on the back of falling oil prices. The drop in Brent to nearly $90 was a signal of declining demand in the economy. 

Shrinking consumption should translate into slower inflation, allowing the Fed to tighten its policy at a slower pace. However, the cooling of oil prices on Friday was offset by strong labor market data. Unemployment in the U.S. fell to 3.5%. Still, the best Nasdaq stocks showed gains. 

Fed officials often refer to a robust labor market in their rhetoric as an indication of a rate hike. Last week’s macroeconomic indicators suggest that the regulator remains free to act. Forecasts do not look rosy either. 

Average earnings estimates for the S&P 500 for 2023 are down 2.7% since the end of the first-quarter earnings season. The reason: lower expectations for growth in securities. Analysts’ estimates set the stage for a longer market recovery cycle. Inflation and the “era of expensive money” continue to hold back production.



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