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The Bull is back

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Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

The Organization of Petroleum Exporting Countries (OPEC) announced a significant reduction in production during July, attributed to substantial cuts implemented by Saudi Arabia and Russia. While OPEC maintained its global oil demand projections for both 2023 and 2024, a slight upward revision was made to its forecast for worldwide economic growth. The convergence of a positive demand outlook and indications of tightening global supplies fuelled a rally in oil prices over the past two months with WTI crude reaching a 10-month peak.

However, this optimistic sentiment has been tempered by several factors. Concerns about deteriorating economic conditions in China, coupled with the potential imposition of elevated U.S. interest rates, cast uncertainty over OPEC’s positive projection. The appreciation of the U.S. dollar, reflecting expectations of prolonged higher interest rates, did not manage to exert downward pressure on recent oil price gains.

China, the world’s largest oil importer, emerged as a focal point of concern in the oil markets. Recent discouraging trade and inflation data, and the revelation of a decline in China’s oil imports, eroded optimism about a robust demand recovery. The nation grapples with the potential of a debt crisis in its property sector, posing a further threat to growth. Additionally, newly imposed investment restrictions on China by the U.S. raised apprehensions of a rekindled trade conflict.

Global oil markets are poised to experience a substantial supply deficit of over 2 million barrels per day during the current quarter, predominantly attributed to Saudi Arabia’s production reduction. Output from OPEC plummeted in the past month, as the kingdom unilaterally implemented cutbacks to stabilize markets. The Saudi-led production cut is set to continue in the upcoming months, potentially causing OPEC’s average production rate for the quarter to be approximately 27.3 million barrels per day—roughly 2.26 million barrels per day lower than consumer demand. This situation could result in the most pronounced inventory decline observed in two years.

The surge in oil prices was driven by escalating global consumption and the supply constraints imposed by OPEC and its allies collectively known as OPEC+. This has led to a depletion of inventories in the United States and other regions. Anticipating sustained OPEC+ supply reductions, the rest of the year could witness a gradual erosion of oil inventories, potentially leading to further price appreciation. However, these gains might be curtailed by impending economic headwinds projected to constrain global demand growth in 2024, as highlighted by the International Energy Agency (IEA).

SourceL TradingView

Oil prices are on track for their seventh consecutive week of advancement, with Wednesday’s price action breaking above its key resistance of $83.53, confirming that the prior down trend has reversed course and a new secondary up trend has started. The Relative Strength Index indicator is gradually improving also pointing to higher price levels in the months ahead. Given the bullish breakout on the daily chart and the improvement in the momentum conditions levels to $92.00 appear feasible over the medium-term.

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Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Geopolitical tensions and extended supply cuts by OPEC+ could continue to support prices.
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Geopolitical tensions and extended supply cuts by OPEC+ could continue to support prices.
Geopolitical tensions and extended supply cuts by OPEC+ could continue to support prices.
Geopolitical tensions and extended supply cuts by OPEC+ could continue to support prices.
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Crude prices rallied amid U.S. storage withdrawal and weaker dollar.
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Crude prices rallied amid U.S. storage withdrawal and weaker dollar.
Crude prices rallied amid U.S. storage withdrawal and weaker dollar.
Crude prices rallied amid U.S. storage withdrawal and weaker dollar.
OPEC+ endeavours to influence crude prices by cutting supply were elusive.
OPEC+ endeavours to influence crude prices by cutting supply were elusive.
Violeta-540x540-1.jpg
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OPEC+ endeavours to influence crude prices by cutting supply were elusive.
OPEC+ endeavours to influence crude prices by cutting supply were elusive.
OPEC+ endeavours to influence crude prices by cutting supply were elusive.
Increasing US crude supply keeps prices under pressure.
Increasing US crude supply keeps prices under pressure.
Violeta-540x540-1.jpg
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Increasing US crude supply keeps prices under pressure.
Increasing US crude supply keeps prices under pressure.
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Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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