Will Oil Reach $100 and Push Inflation Higher?
According to media reports, US asked Saudi Arabia to increase production when energy costs soared and pledged to step in and buy oil if prices fell. But last week, the Biden administration went back on its word and publicly ruled out purchasing new crude oil.
The collapse of Silicon Valley Bank also affected commodities. Therefore, OPEC chose to cut production to stabilize the market.
Energy stocks surged yesterday, with $Marathon(MRO)$ up about 10%, $ConocoPhillips(COP)$ up 9.3% and $BP PLC(BP)$ up 4.74%. Buffett’s holdings - $Occidental(OXY)$ rose 4.4% yesterday; $Chevron(CVX)$ rose 4.16% yesterday.
Most analysts on Wall Street believe that most of this production cut will be implemented to actual production. They are bullish that Brent oil $Brent Last Day Financial - main 2306(BZmain)$ will reach $100/bbl.
Goldman Sachs raised the price of Brent crude oil to $95 a barrel by the end of 2023 and to $100 by the end of 2024.
How to trade crude oil?
1) WTI crude oil $WTI Crude Oil - main 2305(CLmain)$ is the most liquid and actively traded crude oil contract in the world.
2) Brent oil $Brent Last Day Financial - main 2306(BZmain)$ is the second largest futures contract in cmegroup's oil benchmark product family.
3) In addition to the two-largest crude oil contracts, investors can also choose $Micro WTI Crude Oil - main 2305(MCLmain)$ , micro contracts of crude oil.
Micro contracts require less margin and take less volatility risks than two standard contracts.
To learn more about crude oil futures, you can read How to Trade Oil and Make the Most of 24h Quotes?
Higher oil prices will drive CPI higher and lead to more rate hikes?
On April 3, a spokesman for the White House National Security Council held a press conference to oppose OPEC's production cuts. Treasury Secretary Yellen criticized the production cuts as "very unconstructive", adding to the burden of inflation and detrimental to the global economy.
Citi's Jefferies said:
From $ 80 per barrel, every $ 10 rise of crude oil prices will add 0.5 percentage points to US CPI.
This is a conclusion that takes into account the same percentage increase in gasoline prices and the weight of gasoline in the CPI (currently slightly more than 3%), as well as some spillover effects.
Bullard, president of the St. Louis Fed, said
Higher oil prices could make the Fed's job of suppressing inflation more challenging.
Some believe that OPEC production cuts may eventually make the Fed to continue to raise interest rates, with expectations of a 25 basis point hike in the Fed in May elevated.
Are you bullish on crude oil’s rebound?
Have you ever traded crude oil?
If inflation is back, what’s your inflation trading plan?
Leave your comments to win tiger coins~
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inflation will continue to fall. that's the narrative that the whole world is expecting. self fulfilling prophecy. plus fairy god Fed will ensure that.
keep buying the dips and be rewarded 5 years from now
@LMSunshine @Universe宇宙 @Aqa @HelenJanet @GoodLife99 @rL how do you think!
how's yours @Viv22 @LMSunshine @KYHBKO @Tigress02 @Universe宇宙 @kungpao @wine18 @Xian789 @cindyft @MTok
这一消息发布后，原油立即出现🐂并不令人惊讶。然而，如果我们与2020年相比，目前的价格对我来说是一个高点，到目前为止上涨了60%以上，如果衰退“可能”很快就会到来呢？
如果通货膨胀回来，我看跌原油，因为美联储可能会继续加息，以降低消费能力。
明智投资&祝大家好运！
higher oil prices won't be good for inflation.
be patient with oil and see where price wants to go...personally prefer to trade oil companies over oil especially though lower on the cost curve.
它表明，每当美国加息时，一切都在下降，因为一切都与美国货币挂钩。
一旦美联储暂停利率，我们可能会看到上升趋势。