Oil tends to rise and ignores problems with the U.S. debt ceiling

23 May 2023 201
Oil tends to rise and ignores problems with the U.S. debt ceiling

Oil ignores all the negative statements about the U.S. debt ceiling. In addition, it ignores a more bearish outlook for the Fed rate. Such behavior shows that it is ready to rise. Analysts’ opinions on the commodity prospects differ. Almost all forecasts outline economic uncertainty. One of the latest suggests a massive energy crisis.

Ford Nicholson, CEO of private equity firm Kepis & Pobe, projects high volatility in the energy sector. Fragmentation of the global economy is making it more difficult to supply oil and gas. This process is a result of sanctions on resource supply, dedollarization, and inflation. 

According to Nicholson, energy shortages will force countries to use alternative currencies to pay for raw materials. The current energy crisis provides opportunities for investors to profit. The world continues to adapt to market imbalances and fundamental changes.

The issue of oil exports from Iraq remains unresolved. This also supports the prices.

Reduced oil production in Iraqi Kurdistan continues due to difficulties in resuming exports through Turkey's Ceyhan.

After the International Chamber of Commerce's arbitration decision Turkey stopped supply of 450,000 barrels of Iraqi oil per day through the Iraq-Turkey pipeline.

Decreased exports and limited oil storage capacity in the region led to a significant drop in production of 450,000 barrels per day. Many deposits, which previously continued to produce oil, have been out of usage or have declined their production.

According to the technical analysis, oil is traded in a narrow rectangle. Bullish fundamentals are likely to revise the commodity price upward, as negative triggers are ignored. Thus, long positions in oil might be opened. The growth target will be the gap’s opening level at $80. OPEC+ announced additional cuts in oil production in early April just at this level. A Stop-loss will be set at $73.5. Reaching this price will mean the exit from the rectangle through the lower limit.

Brent oil is likely to rise:

Take profit – 80.0

Stop-loss – 73.5

This content is for informational purposes only and is not intended to be investing advice.

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