Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Analysis of underlying commodity demand & supply dynamics, price trends and forecasts

Commodities

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

<ul>
<li>Crowded positions are vulnerable to profit taking and future redemptions which places Energy (XLE proxy) under the spotlight. XLE below the 75 pivot would be bearish.</li>
<li>Energy equity instruments are the preferred hedge to underlying long exposure with WTI likely to outperform energy shares in a down draft.</li>
<li>WTI 105 and 95 break points in focus with  C wave risk to 89/85.</li>
</ul>

<ul>
<li>WTI break below 116 wedge support. Fresh long support at 105/108. Oil still looks crowded with shakeout risk if a recovery fails under 115.</li>
<li>Two trade set ups for oil outlined below. Long from 108/105 to test 115 and a short near 115. Energy is the last pillar of strength with exodus risk.</li>
<li>Gold short below bear wedge valid to 1,790/70 to turn long. Copper faces a break below 4.05 floor support (demand constraint). Yield and USD uptick pressure this week.</li>
</ul>

<ul>
<li>WTI support breach insight on June 19 outlined the break of support and bias to pressure 105 pivot support. Oil and Agriculture weakness will deflate inflation expectations.</li>
<li>Metals leading commodities lower with bounce support approaching with agriculture just cracking key supports. Weakness would ease inflation expectations and help spur a July/August choppy recovery.</li>
<li>Cycle: Late June low re test ahead of early July bounce only to wobble into the Fed. Post Fed more bullish in August ahead of the bearish September/October period.</li>
</ul>

<ul>
<li>The start of Ukraine-Russia peace talks have yanked Brent crude down from 10-year highs of around $128 on March 8 to $108 as of Friday. </li>
<li>But there is a risk premium of at least $18 still embedded in crude prices, which will evaporate only with a rapprochement and ceasefire in the Ukraine war. </li>
<li>In this report, we assess the net impact of the bullish and bearish forces on crude in the very near term and the next couple of months.</li>
</ul>

<ul>
<li>Brent vaulted above the $100 mark early Thursday as Russia pushed troops into eastern Ukraine.</li>
<li>The worst-case scenario for exacerbating oil and gas markets tightness has begun to unfold, which means the rally could go further unless diplomacy is revived.</li>
<li>Mitigating tools and resources -- OPEC+ spare capacity, potential Iran deal, SPR releases -- are severely limited. </li>
</ul>

Bulls Bears Apr 2022

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Crude Oil

Bulls & Bears: Near-Term and Short-Term View on Oil Prices