In the opinion of the strategists of UBS, the recent weakness in the price of oil – which has cut 23% from the price of Brent crude since the peak in mid-June – is not justified by market fundamentals. Next, three reasons that highlight the rise in oil.
Imports from China seem to rebound
“Demand for oil will be bolstered around the world by its growing use to generate electricity, reflecting higher prices or lower availability of gas and coal.”
“Imports from China look set to rebound. Business portal Caixin has estimated that 65 million people in 33 Chinese cities are now under semi-lockdown conditions as the government tries to curb virus outbreaks. Despite this, “We see a rebound in crude oil imports from China from such unusually low levels. Meanwhile, while China’s economic recovery has been bumpy, we see growth reviving in the coming months.”
“It looks like global oil supply will come under pressure later in the year. This is partly due to the end of sales of strategic oil reserves by OECD countries. In addition, Europe’s decision to stop imports closely The 3 million barrels a day rate of Russian oil will not fully take effect until close to the cut-off point in December (for crude) and February (for refined products).In addition, efforts to introduce more Iranian oil to world markets continue in the air”.
“We expect Brent to end the year around 125 dollars per barrel“.
Source: Fx Street
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