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🥊 EIA vs. Speculators: Waiting for Oil at $200?⠀
📊 While benchmarks are trying to overcome the sacred level of $100 per barrel, options traders are actively exploring the zone 10 figures higher. Yesterday, the most popular oil contract was an option to buy Brent at $200 in March 2023.
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Options traders are always more aggressive than regular participants, but now the difference between the volume of bullish and bearish bets in the options market is greater than at any time in history.
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Approximately 50% of the buy volume in the $200 zone was placed by one large participant who opened several options for approximately $810,000. But this desperate player is not the only one who is waiting for the price at this level in the spring of 2023.
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For two months now, prices have been held back by fears of a recession, and oil has never risen above $150 at all. Of course, the path to the $200 level is quite a long one, but theoretically, the right combination of circumstances can push oil to critical highs.
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Several factors allow one to be so optimistic.⠀
EU plans to stop all imports of Russian oil as early as December 5 and limit market prices for this raw material. The embargo and tight price levels will reduce Russian exports and reduce total supply to 1 mb/d.
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US continues to sell oil from the strategic reserve, but sales will decline this month, and this program will end in December. These «strategic» barrels will appear on the market in the first quarter of next year.
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US oil production is declining, and diesel and heating oil stocks are at a minimum. After today's elections, likely, the US Congress will not authorize new sales of reserve raw materials. So Biden will have nothing to restrain the growth of oil prices.
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And if China does loosen Covid rules, demand will start to pick up quickly, and then $200 a barrel will sound less fantastic.
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Let's see what levels the EIA considers in its current report. And who was right − speculators or analysts − we will find out in a few months.
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Profits to y’all!