Crude Oil and AUD/USD watch

3 days ago, I wrote that Oil needed a quick drop of ‘$2 or $3’ in order to extend some strength in oil’s current downtrend.

WTI Crude fell $4.75 on Friday, closing its trading week at $78.74

Equally, the AUD/USD exhibited expected weakness during Friday’s session. It closed at 0.6531.

So, I’ll watch for how the AUD/USD and WTI Crude symbiotically test their next respective levels of 0.6464 and $77.50, as neither ‘daily’ downtrends are confirming continuing strength.

Hint: probability is rising that we are at the tail-end (+/- 3%-6%) of the downdraft in both assets.

September 24, 2022

by Rob Zdravevski

rob@karriasset.com.au

31% decline is losing some steam

Here are some WTI Crude Oil trend lines I’m watching.

The downward trend remains intact, however on a daily basis it’ll need a quick drop of $2-$3 in order to add some strength to this trend, otherwise we can kiss a visit to $77.50 and any notion of ~ $65 good bye for the time being.

Should this trend wane, it will correspond with the AUD/USD and the CRB Index finding a floor.

September 20, 2022

by Rob Zdravevski

rob@karriasset.com.au

Watching Currencies – AUD/JPY and Crude Oil

Correlations – AUD/JPY and Crude Oil

September 5, 2022
by Rob Zdravevski
rob@karriasset.com.au

The Americas are drilling, ROW are not

Canadian rig count leaps 30% on the month.

In fact, over the past 2 months, the Canadians have doubled the amount of rigs put to work.

Even with that effort, the Canadians are still 25% below its February 2020 peak.

While if we only look at the U.S. and Latin America, they are a whisker away from its February 2020 number.

Uncannily, Europe, Africa and the Middle East all have approximately 29% less rigs cranking away than seen in February 2020.

Globally we’ve seen 2 consecutive months of a 4% increase in rigs (count) deployed.

Total global rig count is closing in on the March 2020 figure, not close to February 2020 and still some way to go towards any month back to 2017. 

So, the Americas are trying but the rest of world is tempered.

August 15, 2022

by Rob Zdravevski

rob@karriasset.com.au

Oh the hypocrisy!

The United States receives 8% of its Crude Oil imports from Russia.

(on another note, 2% of its oil imports come from Iraq and a further 1% from Libya)

The U.S. have announced a release of 30 million barrels from their Strategic Petroleum Reserves.

Various news reports carry the sub-text that the release will assist to ‘end the weaponisation of Russia oil’.

The United States import 30 million barrels of oil from Russia ALONE every 2 months.

In fact, the Biden administration is on a run rate (so far) of importing more Russian than during the Trump years.

Don’t let the headlines and spin mislead you.

#context

March 3, 2022
by Rob Zdravevski
rob@karriasset.com.au

Brent at stretched percentages

I’m studying correlation, convergence & divergence activity across a cross selection of assets.

Oil is featuring heavily in my macro work.

Below is a chart of Brent Crude which shows it touching historic peak of the percentage it is trading above its 200 week moving average.

This also coincides with a visit to a longer term resistance line.

I’ll also watch currency crosses such as AUD/JPY to help me stay on the correct side of the move.

Fundamentally, sustained higher oil prices will crimp corporate earnings and stifle GDP expansion.

February 14, 2022

by Rob Zdravevski

rob@karriasset.com.au

Oil about to hit a 3 1/2 year high

It’s an important coming day or two in Brent Crude Oil trading.

I’m watching if it trades above $86.68.

Friday’s high was $86.52.

That means it makes a ‘higher high’ seen on October 25, 2021.

Albeit, a ‘higher high’ while also recent making a ‘lower low’ portends for an extension of the current rally, on a Daily basis, Brent is now in Overbought territory and 2 standard deviations above its mean.

Whilst the chart below is current, it has notes on it from a post on November 5th, 2021, which also shows the previous high in Brent at $86.71 from October 3, 2018.

January 17, 2021

by Rob Zdravevski

rob@karriasset.com.au

Rigs in operation continues to increase

The amount of rigs in operation (globally) now back to levels seen 19 months ago.

African and U.S. locales lead the month over month percentage increase.

Don’t fight OPEC?

We say ‘Don’t fight the Fed’,
Perhaps Biden shouldn’t fight OPEC?
What a terrible politically motivated decision especially when the SPR is normally kept for emergency supply disruptions such as in case of a hurricane etc.

And he asks or even persuades other nations to join him in their own ‘release’.

Such ad-hoc ‘band-aids’ seldom solve and this releases will be soon forgotten.

Alas, the oil price rose 3% today.
Maybe short covering played a part as speculators bet on a larger dumping.

Biden just added supply this hurting his own U.S. drillers. With this type of decision, drillers are hardly about to make capex decisions to drill more.

This story also mentions how the replenishing costs may be detrimental to refiners.

Lo and behold, pending OPEC’s response in the coming months, the reflexivity of this scenario means oil prices make their way lower due to inflationary pressures crimping GDP growth.

Furthermore, Biden becoming worse at international diplomacy. His relationship with Saudi Arabia is dreadful (interesting Saudi and China) are close allies.

His relationship with Russia is awful. (And Russian troops gather around Biden’s mates in the Ukraine)

And China and Russia definantly cooperate.

To understand Oil, it’s worthy to watch how the world works.

November 24, 2021

by Rob Zdravevski

rob@karriasset.com.au

Biden’s juxtoposition

I’m always entertained by these stories.

https://www.bloomberg.com/news/articles/2021-11-03/opec-heads-for-geopolitical-showdown-as-biden-demands-more-oil?sref=qLOW1ygh

Firstly, the United States isn’t part of OPEC.

When you’re not a member of a member based organisation, how can you expect to have your requests (demands) actioned?

Secondly, the irony of Biden asking OPEC to pump more oil (so to ease U.S. domestic gasoline prices) while he is attending COP26 in Glasgow is comical.

Thirdly, he seems to be targeting blame at the Saudi’s for not increasing their output. There are other nations which make up OPEC and OPEC+.

Biden is proving to be a poor manager of geopolitical nuances.

But there any many more angles to this story;

Imagine if the U.S. was still a net exporter of oil?

A lower oil price may make their shale market uneconomical?

The U.S. can always lift sanctions on Iranian oil, allowing it to hit the market?

p.s. In my view, the decline in Crude was expected once OPEC said they won’t be increasing output. Why? Because, we will be closer to output being increased at the next meeting……Markets price in the probability of next move quickly.

#oil

November 5, 2021

by Rob Zdravevski

rob@karriasset.com.au

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