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Matein Khalid
My technique advice to my pals was to brief Brent crude at or above $120 for the $65 goal I bought from the world’s pre-eminent oil economist/OPEC watcher Ed Morse. The brief Brent thought has been a cash gusher now that Brent has plunged 7% in at this time’s session to 99 as I write. The autumn in oil costs was inevitable. King Greenback is at 20 yr highs, gold has plunged to 1725, Dr. Copper and the commercial metallic advanced is in deep macro doo doo and recession danger is being priced into each asset class I observe with a vengeance.
One more reason for crude oil’s plunge is that macro hedge funds now agree that demand destruction can nicely trigger one other $30 to $35 drop in oil costs as Ed Morse expects and at the moment are implementing the precise methods I outlined in my technique posts. It’s important that pattern following CTAs or momentum merchants didn’t defend West Texas Intermediate futures at $100 and slammed them right down to $96, a mere 4% above pre-Ukraine invasion ranges.
But the 800 pound gorilla within the room is that President Biden is within the kingdom on a state go to to Saudi Arabia and can meet each Arab oil and gasoline producer head of state. His message is crystal clear, America’s allies should ramp up output to stop a stagflation nightmare for the worldwide economic system and get US gasoline costs down much more so the Dems have a snowball’s probability in hell of successful in November.
The good cash on Wall Avenue has been bailing out of Seven Sister supermajors, refiners, offshore drillers, oil service corporations and the Permian Basin fracking brigade for not less than the previous month, a telltale signal for me that the Greek Goddess of wealth Lakshmi is whispering bearish candy nothings in to my mind to brief crude oil. Now that Brent is sinking just like the HMS Titanic after it hit the macro iceberg, I wish to fly to Athens, climb the Acropolis, stand within the temple of Athena within the Parthenon and shout Lakshmi ma ki jai in order that your entire Hellenic civilization, whose financial affect peaked within the Med with olive oil commerce 2500 years in the past will get its monetary deliverance from the fiscal jackboot of Germany.
When Macau closed down its 9 casinos for per week, I knew that the COVID nightmare had not led to China, the world’s second largest marketplace for moist barrel tanker cargoes. Larger Fed rates of interest are additionally a ache level for oil costs. The World Financial institution has recognized 70 international locations that can face a sovereign debt disaster as a result of sharply larger US greenback borrowing value and this can even hit oil demand within the gasoline guzzler economies of the growing world.
It’s mission important to look at macro/hedge fund promoting within the crude oil futures market, which commerce 1.5 billion barrels a day when world oil demand is mere 100 MBD. These are the true princes of black gold on the Chicago Merc and the London IPE since they set the worth for the marginal barrel of oil that comes out of the Arabian desert or West Texas’s Permian Basin.
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