On this long weekend, traders can only be waiting for the market... They can read the latest economic news without being able to act and position themselves on the market.
They literally have to "champ at the bit" right now because they are unable to act. The main market places being closed for 3 to 4 days for the Easter long weekend (3 for the USA and Asia, 4 for Europe) and after a flat week for the price of oil barrel, we have the impression that the main news, that of the NFPs waited for the inability and immobility of the market to make its appearance.
In this wake, OPEC continues to draw its last cards in the hope of moving the price of oil upwards.
His latest card, the increase in the price of his barrel of Arab Light for Asia of 0.30 cents.
This increase sends a strong message to the market, highlighting that the kingdom is growing in the next strong Chinese demand.
And yet a few days earlier, the cartel's drastic cuts of 1.6 million barrels per day underscored its apprehension of global market demand, fear of recession and other potential banking crises following aggressive rate hikes in the United States and Europe.
Then... is this another poker move on the part of the Kingdom to influence the price of oil in its favor?
China consumes a lot of Russian oil, Saudi Arabia takes the potential risk that China will turn to even more cheap Russian oil for consumption if prices become too high. Maybe Saudi Arabia is betting on the Tawainain conflict? Hoping that China wants to make its oil reserves before?
For some time now, China has been multiplying military incursions into Taiwanese area... The international community and particularly the US are on the alert at the slightest misstep by China towards Tawain.
If the red line is crossed and a conflict breaks out... oil prices will not follow the same trajectory as during the conflict in Ukraine.
At the beginning of the conflict in Ukraine, there was the supply of Europe by Russian pipelines that was at stake... Then followed series of sanctions, more or less effective, as well as embargoes against Russia. If the pattern is repeated for China, China's growth depends largely on its exports... if Europeans and the US stop consuming Chinese... their GDP will not last long... and their oil consumption.
But since oil is closely correlated with the VIX volatility Index and fears in the markets, we can always see a surge and an oil’s price hike before a sharp fallout.
We're not there yet... even if the conflict seems inevitable.
It is normal that OPEC is playing its cards and assets on the international scene to influence the price of a barrel in its favor as much as possible.
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