WTI crude oil: IMF raises global growth forecast, dollar rebound may limit oil price gains

Summary:IMFraised global growth forecasts,WTICrude oil subject to80The US dollar mark; the Fed’s interest rate decision is approaching, and the rebound in the US dollar may continue the adjustment momentum of oil prices.

IMF raises global growth forecast, China’s reopening a factor

Tuesday(1moon31Japan) International Monetary Fund (IMF) in the latest “World Economic Outlook Report” predicts that economic growth will be more resilient than before, and a global recession may be avoided. Among them, consumer dynamism and the reopening of the Chinese economy are reasons for a more optimistic outlook.

IMFWill2023year globalGDPGrowth forecast from last year10monthly estimated2.7%raised to2.9%;Will2024year globalGDPGrowth forecast from last year10monthly estimated3.2%Downgraded to3.1%;Will2023China’s economic growth rate is expected to be4.4%raised to5.2%.

also,IMFIt is expected that due to the decline in commodity prices and other reasons,2023year and2024The annual global inflation rate will change from2022Year8.8%down to6.6%and4.3%.

There is no doubt that,2023In 2019, the global economy will still be affected by the interest rate hikes by central banks to deal with inflation, the war between Russia and Ukraine, and the progress of China’s economic recovery.IMFthink that since last year10Over the past month, adverse risks have eased.

but,IMFIt warned that the global economy still faces considerable risks, including (China’s health problems may hinder recovery, Russia’s war in Ukraine may escalate, and tightening global financing costs may also exacerbate the debt crisis, etc.). It is worth noting that,IMFEmphasized that the fight against inflation is not over, and urged central banks to resist the temptation to turn.

The author reminds,WTIcrude oil from2022year6The downward trend since last month is closely related to the global economic outlook. The Fed started shrinking its balance sheet, causing the market to fall into a “dollar shortage”, while the central banks of various countries followed the Fed to raise interest rates, which impacted the global economic outlook.WTICrude oil falls during this phase43%.

Despite this situation with the end of last year OPEC+Production cuts, the Fed’s policy tightening has slowed down, and China’s epidemic has eased. But on the whole, the uncertainty of the inflation outlook still limits the pace of oil price upside, and oil prices are likely to be in the bottom construction stage.

Fed Rate Decision & OPEC+ Meeting

According to the latest publishedCME‘FedWatch’ shows Fed raising interest rates25basis points to4.50%-4.75%The probability of interval is99.1%the market is generally betting that the Fed will2month and3months will push interest rates up to5%and at the end of the year the interest rate was reduced to4.6%.

In fact, wage growth is slowing as the latest US economic data showed the employment cost index. At the same time, housing inflation is expected to fall in the middle of the year due to the hysteresis effect, and commodity inflation prices will slow down due to the recovery of the supply chain. The overall inflation will show a clear downward trend. That means the case for betting the Fed will cut interest rates before the end of the year is getting stronger.

Additionally, Tuesday (1moon31Japan) published by the U.S.1The Conference Board’s consumer confidence index fell to107.1,expected109,The former value108.3. U.S. consumer confidence fell unexpectedly this month, reflecting less optimistic expectations for the economy and job market. The market speculates that the Fed is more concerned with economic growth than controlling inflation.

US dollar index:

Source: tradingview

But the author reminds that since last year 9since the end of the month from114.0The decline is mainly affected by financial stability and inflation. As the market expects inflation to decline andMOVEThe index has fallen from last year’s high, and the author expects Thursday (2moon2Japan) the Federal Reserve’s interest rate decision announced will be biased towards “hawks”.

Powell may once again emphasize his determination to control inflation and “remind” the market of the “stubbornness” of inflation. Since oil prices are denominated in US dollars, it may be difficult for oil prices to break through in a trend at this stage. Investors who are bullish on oil prices should remain patient.

In addition, OPEC will usher in the+Meeting.According to a Reuters survey, OPEC1monthly oil production12month drop5million barrels/days to2887million barrels/Today, the country with the largest decline in production is Iraq.

opec last year10Annual production reduction200million barrels/Japan’s move means that it is in the “observation period”, given that the author believes that OPEC+Member States300million barrels/Only a production cut of more than one day may have a real impact on oil prices, so this time OPEC+It is likely to adopt a conservative attitude and maintain the same output scale.

WTI Crude Oil Trend Analysis: The adjustment of oil prices may not be over, pay attention to the support of 74 US dollars

WTICrude oil daily chart:

Source: tradingview

WTI crude oil is currently consolidating below the 80 mark. A series of higher highs and higher lows in the previous period indicates that the bottom of oil prices may have appeared, implying that the mid-term bottom may have appeared.

However, oil prices continue to be constrained by the upper 82.0-85.0 area resistance in the short term, and we need to be wary of oil prices falling again to test the possibility of $74 and the previous low of $70.

In addition, WTI crude oil is currently approaching the time window around February 2. If the oil price falls sharply in the short term and finally stabilizes around $74.0, it will be regarded as a strong signal. Overall, the oil price outlook tends to be optimistic, but investors still need to wait patiently for the confirmation of short-term bullish signals.(Billywritten)

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