Gold Market Wire
News, analysis and commentary for gold traders and investors
Crude Oil Update
Crude Oil: Consolidation on the way to Higher Prices. (Adds Update)
November 7, 2022 - (Gold Market Wire) - Friday's surge, which took us within a dollar of the magical $100 mark on Brent, is being consolidated this morning, out of the East.
The 100-day moving average is now in sight, and is the next target. If we get a solid close above it, we will be well positioned to continue the move higher. In truth, there is little to stop this Bull-run now. It's charge is really just beginning.
The reasons are easily understood although, somehow, difficult for many to comprehend.
The first among these is the simple fact that inflation is not going away. All that jabber about how this inflationary move was a temporary phenomena has been put to rest in the past weeks. Inflation is here to stay and isn't going anywhere - for a period of years. The war mongering will only make this worse. Secondly - the strange, somewhat insane desire to "virtue signal unto death" by the Western world, by cutting off its supply of fuel and (therefore) food, right at the cusp of Winter, has simply made energy scarce and more expensive. (Was it supposed to make it cheaper?) Add to this the sanctimonious throttling of all upstream investment in the oil and gas sector and the perfect storm has arrived...ready to rage and wreck destruction - which it promptly will.
Lastly, the complete failure in the West to comprehend that the machinations of the Ukraine regime in the Russian-speaking Donbass will be countered by Russia has added fuel to the energy Bull. The West has somehow twisted itself into the strangiest of positions whereby it no longer needs fossil fuels, or the food that is derived from them; believes that wind and solar are viable alternatives (which they patently are not); is willing to believe that Russia will not fight to the death (let alone the fact that it is actually and highly capable of fighting) to preserve its Russian-speaking enclaves and its military/naval fortress in (wholly Russian-speaking) Crimea. All of this is political folly of the first order. Russia is not going to let go of Crimea and the Donbass, and the deposing of Putin, should it happen, will see a full scale military effort by Russia against the West by his far more bellicose replacements, who are waiting in the wings. This is another mistake in the Western calculus over Russia.
This all means higher oil prices, even before a full-scale, potentially global, war is initiated. If that occurs, and we are certainly on the path towards it, the mere military demand for energy will create a demand surge of truly exponential proportions and oil will soar to unimaginable heights.
Crude is strong. And that is not going to change anytime soon.
The challenge: a series of new high closings in the offing?