Research

Prime Winter Trade

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Algo Research Team

Industry | Nov 23, 2022 | Views: 9

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Key Summary:

  • Short-term momentum is positive for oil trade
  • Geopolitics remains as downside risk but the risk-reward is attractive
  • Indonesian stocks oil exposure are MEDC, ELSA, PGAS

Last night, Saudi Arabia made a history by winning 2-1 against Argentina in the World Cup 2022 group match. Is this a sign that good things are coming for oil price? We think so. Typically, the phrase "winter is coming" means bad for financial asset i.e. the crypto winter, but for the Gulf Prince and its Princess Oil, they should take the center stage for this coming winter.


This month, there has been so much volatility for the oil market (it has been throughout the whole year). We saw lower USD (cheaper to buy oil in $), China reopening but then there was mobility tightening due to Covid-19 flare up (so not reopening?), news report that OPEC would increase oil production that was quickly denied and further reaffirmed its commitment to balance the market (meaning support for oil price - a floor likely at $80/barrel? - against US SPR withdrawal and liquidity tightening), the EU planned embargo on Russian oil together with G7 oil price cap and winter that is seasonally a high demand period (more gas-to-oil substitute due to the former's skyrocketing price especially in Europe). Indeed, the volatility is not to be underestimated and frustrating for some investors, but a bliss for traders.

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