Gold 1790,74
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EURUSD 1,1589
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DJIA 34366,50
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OIL.WTI 80,415
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DAX 15261
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This is a question that increasingly interests trend-following traders. And it is increasingly frightening for bears holding short positions with shoulders. It would seem! Just over a year ago we saw black gold at minus $37 a barrel. And analysts warned that we might never see a $50 price again.
OIL.WTI
Black gold is always ready to surprise. And it is least interested in analysts’ opinions. WTI crude is close to the highs seen back in 2014. What can we expect next?
A year ago, the answer was known. For any surge in the price of black gold, there was a surge in oil production by shale producers. The beauty of shale production is that it is possible to both freeze operating wells and reopen them quickly enough.
The situation today is different. If you pay attention to the number of open rigs, you can see that there are half as many as there were three years ago. At that time, the oil price was at about the same level.
Most likely, the shale producers have realised that as soon as they ramp up their oil output hard, there is a collapse to $30-40 a barrel. Of course, nobody wants that. The price war can’t go on for long. Well, or it can, but there are fewer survivors (I mean primarily the American and Canadian shale companies that are indebted to them). This is why shale producers do not want to hinder further growth of oil prices right now.
There is a second important point. $80 per barrel of WTI oil today is not at all the $80 that companies were getting three years ago. Inflation in logistics, industrial equipment and wages is much higher than consumer inflation of 5% in the US. Which means that part of the price increase is based on that factor alone.
In the first quarter of 2022, especially in the event of a cold winter in the Western Hemisphere, we could see the bulls attempt to push prices to $100/barrel, to remove a huge amount of stops. That will probably be the limit of this oil rally.
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