2023 Market Forecast by Solid ECN

Crude Oil

Brent crude is losing 4% today, which can be linked to several factors. The US media is talking about uncertainty regarding the debt ceiling agreement, as several Republicans have made it clear that they will not support the bill. In addition, there are increasing question marks over China and further demand growth.

Nonetheless, the key factor that is likely to support price declines at this point is the disagreement within the enlarged OPEC+ cartel. Recently, Saudi Arabia's oil minister warned contract sellers about the possibility of OPEC+ action, which could suggest another potential production cut. On the other hand, Russia's energy minister says Russia is happy with the current course of events and prices. However, there have been signs that Russia may also be producing and exporting more than the internal arrangements in the cartel. This threatens a potential 'break-up' of the entire agreement, which could lead to a return of supply of as much as 2 million barrels per day, although of course one has to bear in mind the limited capacity for such a rapid increase in production. Nevertheless, recently, Iraq or the UAE were said to have hinted that they would like to produce more.



Strong declines in Brent crude were triggered by uncertainty about the sustainability of the OPEC+ agreement and uncertainty about demand from China or globally if the US were to eventually go bankrupt. The nearest support is around USD 68 per barrel, where the 23.6 retracement is located.

USDCHF Under the Negative Pressure

The USDCHF currency pair has recently experienced a significant amount of negative pressure. This has resulted in the pair breaking through the 0.8965 level and settling below it. This downward movement suggests that the pair may continue to decline, with potential targets being the 0.8900 and 0.8800 levels, which are considered to be key negative stations.



As a result of these developments, a bearish bias is suggested for the USDCHF pair in today?s trading. However, it is important to note that if the pair breaches the 0.8980 level, this could halt the expected decline and instead push the price towards a new bullish correction. In this scenario, the next target for the pair would be the 0.9055 level.

Oil

• Saudi Arabia and Russia's supply cut announcement fails to offset concerns over manufacturing activity slowdown worldwide
• Deceleration in China, Eurozone, and the US manufacturing PMI data contribute to the downward pressure on WTI prices

Despite the supply cut efforts by Saudi Arabia and Russia, WTI crude oil prices continue to face downward pressure due to concerns about a global economic slowdown. The slowdown in manufacturing activity worldwide, as evident from PMI data, has overshadowed the impact of the supply cuts. China's manufacturing PMI indicates a modest expansion but a continued deceleration, while the Eurozone and Germany are experiencing deceleration and a technical recession. The US manufacturing PMI suggests a slowing economy, which could have implications for the rate hike decisions of the US Federal Reserve. Additionally, Russia's plan to reduce exports to boost oil prices is overshadowed by China's slow reopening.



Amidst the deteriorating global manufacturing sector, the bearish sentiment for crude oil persists. Despite OPEC+ cuts and monetary stimulus from China, oil prices remain range-bound. The resistance at $73 has led to repeated rejections, maintaining a bearish bias. There is a possibility of testing the support level at $67.44 or further at $64, and a break below this level could trigger a significant downward movement towards the $57 level. Currently, the price is likely to test the $67.44 support, where buyers might enter the market. Otherwise, if buyers step in, the price may find support and potentially rally towards the $73 resistance zone.