Notice of Index Modifications: Ferrari ETPs

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Violeta Todorova

Date

Robust Oil Demand Would Support Prices

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  • Delayed interest rate cuts could weigh on oil demand
  • EIA reports crude inventories increased significantly last week
  • The oil market is expected to tighten in the second half of the year
  • OPEC maintains robust oil demand forecasts but will start to unwind output cuts

Crude oil prices experienced a sharp selloff following the latest announcement from the Organization of the Petroleum Exporting Countries (OPEC) that the cartel plans to gradually start to increase production from October. The price of West Texas Intermediate (WTI) sold off on the news but has rebounded strongly from $72.48 and has recovered the losses as tensions in the Middle East continue to support prices.

Interest Rate Cuts

During its June meeting the Federal Reserve pushed out the start of rate cuts to perhaps as late as December, projecting only one interest rate cut for the year, down from previous estimates of three cuts. The decision came amid estimates inflation will remain elevated while the Fed needs to gain greater confidence that inflation is moving sustainably toward the 2% target. Generally, higher borrowing costs tend to dampen economic growth, which in turn could limit oil demand. Nonetheless, crude prices did not lose ground on the news.

U.S. Crude Oil Stocks

According to the U.S. Energy Information Administration (EIA) U.S. crude inventories surprisingly increased by 3.7 million barrels to 459.7 million barrels for the week to the 7 th of June, vs. expectations of a 1 million barrel-draw. The change compared with a weekly build of 1.2 million barrels for the previous week. Gasoline stocks also rose more than expected, up by 2.6 million barrels to 233.5 million barrels.

Global Supply and Demand

The EIA, the International Energy Agency (IEA) and OPEC last week updated their views on the global oil demand-supply balance for 2024, predicting declines in global oil inventories, which should provide support to prices in the second half of the year.

OPEC expects the services sector, especially travel and tourism to maintain positive momentum and drive economic growth in the second half of the year. The cartel expects a steady economic growth this year and is projecting oil demand growth of 2.2 million barrels per day for 2024 and 1.8 million bpd in 2025. The group sees global economic growth of 2.8% this year and 2.9% in 2025.

Meanwhile, the EIA revised up its oil demand growth outlook from 900,000 bpd to 1.1 million bpd for this year. EIA’s forecast is in a stark contrast to OPEC’s and appears to be a bit conservative, while OPEC’s one a bit too optimistic. Therefore, demand growth will most likely be somewhere between.

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Source: TradingView

OPEC+ Unwinding Output Cuts

OPEC+ has been cutting output for more than a year, totalling approximately 5.7% of the overall global crude supply. The cuts have been implemented in an attempt to prevent the emergence of a huge supply surplus, which in turn could suppress crude prices and hurt the economies of the oil-dependent OPEC member countries.

Despite the cuts, oil prices have been trading sideways over the past year, which is a result of record U.S. crude production, which has lifted up global supply. Concerns about sluggish demand from China and other major economies also weighed on crude prices.

Earlier in June, in its monthly meeting the cartel agreed to extend those deep reductions in crude output into 2025. However, the group also announced that it would start to gradually unwind some of the cuts from the 1 st of October, which could exert downward pressure on oil prices.

Technical Analysis

The price of WTI has been trading sideways over the past year, fluctuating between $63.64 and $95.03. Momentum indicators remain in neutral territory suggesting that prices are likely to remain within the range over the medium-term.

Last week’s price action broke above its short-term down trend line from its April high suggesting that the correction is likely to be over. While a mild pull back could be seen in the very short-term, levels in the range between $85.00 and $87.00 are achievable in the coming months.

Active traders looking for magnified exposure to crude oil may consider Leverage Shares +2x Long WTI Oil and -2x Short WTI Oil ETPs.

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

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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Terms and Conditions

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.

By clicking you agree to the Terms and Conditions displayed.