The Commodities Markets has seen big action this week on the back of global clues: China, Hong Kong opening up expected to push up the pent up demand for oil use and price; European Region and few Global Markets seen of the biggest gain in the Stock Markets in the first three weeks of 2023 and the softening inflation in the United States all these factors helping oil, gold bulls out in open and Natural Gas bear operator taking complete control on its biggest fall. 

Oil: Market Activity

New York-traded WTI or West Texas Intermediate, crude for the March contract rose with 1.82% gain in the week after settling the session at $ 81.31 per barrel. London traded Brent crude for March contract gained 2.76% in the week and closed at $ 87.63.

The Fed with December 2021 hike of 50 Basis points moved the key short-term rate to a range of 4.25% to 4.5%, its highest level in 15 years. The era of Dollar strength is over and dusted now; dollar index inching closer to 7-month low. US CPI December rose to 6.5% YoY down from 7.1% in the Nov 22. In Sep it was highest since 1982 which hit 40 Year High. It was the slowest annual advance for the CPI since October 2021 and all the indication pointing towards smaller rate hikes ahead of the January end or February 2023 FOMC meeting.

The G7 nation, the European Union and Australia agreement to impose sanctions on Russia from 5^th of December 2022 and agreed to a US $ 60 per barrel price cap on Russian seaborn crude oil as part of sanctions on Russia against its invasion of Ukraine; the measure seems to have short lived to bring down the Oil price. It looks like WTI crude and Brent moving towards $ 100 mark as mentioned in our earlier report. On YTD basis, WTI crude and Brent gained 7% & 11% in the year 2022 respectively.

We expect Brent to trade around $ 100 mark in a short term as there is strong possibility of positive demand scenarios due to China opening up, growth in Indian Economy both the economy constitutes major consumer of Oil demand and US economy to head towards recession as perceived by the Analyst.