Oil Market Shows Signs of Recovery Amidst Declining Prices and Changing Inflation Landscape.
Overview
The crude oil futures market has seen a powerful decline since March 2022 high, but in the past months, a sentiment has been developing among investors as Brent prices hit a two-month high. (Since its March 2022 high, Brent crude has lost half of its value, sinking from $139 to $70 over the past four months.) Oil’s price action has improved to shift the trend from declining to bottoming.
U.S.
Regarding the recent info on U.S. Consumer Price Index (CPI), U.S. inflation figures indicated that the cycle of interest rate hikes in the country is about to end. Furthermore, the American Petroleum Institute (API) data revealed that U.S. oil stocks unexpectedly increased by more than 2 million barrels. The official Energy Information Administration data is anticipated to indicate a draw of 2.2 million barrels, which shows a similar reading to the API data.
China
With a now slowing post-pandemic opening recovery, China´s oil markets await stimulus measures to be implemented. Regarding this, the China Securities Journal (a government-backed media company) reported on the 12th of July that Beijing´s likelihood to increase stimulus spending to support the economy is high. These measures are expected to push the demand for oil in the country as domestic fuel demands increase.
Rest of the world
Oil prices were also supported by tightening supply as a result of Saudi Arabia's and Russia's production curbs.
"All in all, After remaining relatively stagnant for several months, crude oil prices seem to finally have bottomed", states Alfonso Egaña.
Written by: Alfonso Egaña, Market Analyst & Partner at Sora Capital A.C.
Comentarios