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Oil demand from China slows down
Oil prices have been trading in a narrow range over the past month as concerns of slowing crude demand in China neutralises the tighter supply outlook for 2024. Last Thursday data from China – the world’s biggest oil importer have shown that oil imports for January and February 2024 have risen compared to the same period of 2023; however, the data is lower than December, displaying a trend of weakening purchases.
OPEC+ extends production cuts
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies have agreed last Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter. The decision of the oil cartel to tighten oil supply gives additional support to crude prices as concerns over global growth demand for oil and rising output outside the group, especially in the U.S. have been exerting downward pressure on prices.
Uncertainty over interest rate cuts from central banks
Fears of weak demand were exacerbated by the uncertainty over the path of U.S. interest rates, as non-farm payrolls data last Friday indicated that the U.S. labour market remains resilient. U.S. job growth rose by 275,000 new nonfarm payrolls in February, according to the Bureau of Labor Statistics, beating expectations of a 200,000 rise.
The unemployment rate also rose, and wage growth decelerated, showing that the U.S. economy might be slowing which supports the soft landing narrative and increased the probability of a June rate cut. Monetary policy is an important factor weighing on oil prices as lower interest rates could boost economic growth and increase oil demand.
Source: TradingView
IEA forecasts supply deficit for the rest of 2024
The latest report from the International Energy Agency (IEA) suggests the oil market would be tight for the rest of the year. The agency revised its forecast higher by 110,000 bpd from its prior outlook. IEA now anticipates oil demand growth to decline to 1.3 million bpd in 2024 in comparison to 2.3 million bpd growth in 2023.
The IEA lowered its 2024 supply forecast expecting oil supply to rise by 800K bpd to 102.9 million bpd in 2023. The upwardly revised demand growth and the lowered supply growth prognosis suggests a tighter market for the rest of the year.
Technical analysis
Oil prices have been consistently trading higher since mid-December 2023 advancing from a low of $67.71 to a $81.62 intra-day high on Thursday. Thursday’s price action decisively broke above a multiple key resistance of $79.77 confirming a large ascending triangle.
The pattern has bullish implications and points to higher price levels in the months ahead. The initial upside price target for WTI crude is $85.00; however, over the medium-term levels to $89.00 appear easily achievable.
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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
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