- China is undoubtedly shaping price discovery – now, investors are anxiously waiting for concrete evidence of how strong the post-reopening recovery will be.
- Russian crude exports are mainly intact as the shadow fleet moves in.
Oil prices have reversed course ahead of the FED, although I suspect they are a minor part of this month’s oil price equation despite Chair Powell’s broader footprint on forward discounting assets like stock.
A relief rally ensued after the International Monetary Fund revised its upward global growth projections for 2023. However, it warned that higher interest rates and Russia’s invasion of Ukraine would likely weigh on activity.
Still, China is undoubtedly shaping price discovery – now, investors are anxiously waiting for concrete evidence of how strong the post-reopening recovery will be.
To be clear, spot activity conditions remain weak in the PMI surveys, so the improvement is mainly in the forward-looking expectations. On the margin, there are now explicit green shoots – China PMIs and the German IFO, for example – signalling that we may pass through the global manufacturing cycle trough.
The bullish thesis, however, comprises 2 primary components, an upswing in China demand and the simultaneous drop in Russian products. One is assured ( China) the other is the unknown quotient. (Russia)
Russian crude exports are mainly intact as the shadow fleet moves in.
Earlier this week, The Wall Street Journal named Gatik Ship Management among the most active of the upstart companies that have purchased ageing oil tankers to replace Western-owned ships no longer dealing with Russia, with the company managing around 25 tankers now.
That parallel fleet is helping Moscow get crude to buyers in Asia, according to shipping executives, brokers, and vessel-tracking, ownership and insurance data, said the WSJ.
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