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Andreas Zanin
Analysis | June 28, 2021

KTM Commodity Weekly: Stoking inflation?

Yet again, oil prices climb 5-week higher in a row and most likely to close above Monthly- 200MA. If this week the price manages to close above Monthly-200MA, we are marching towards the $78.50- $80 mark initially, followed by $86-$88 and hypothetically $100-$104. We wonder at price level inflation pressure emerges.

Oil traders are waiting for this week’s OPEC meeting scheduled for 1st July. We are currently at $75 a barrel, which we haven’t seen for two years as the COVID crisis coming to an end or strong recovery in oil demand encounters oil supply constraints. 

As the lockdown rules set back nearly every day in the US and Europe, Sydney back to lockdown as COVID cases emerges across Australia. 

Australia in turmoil as multiple states grapples with outbreaks, lockdown, as per NZ Herald. And it looks like the NZ-Aussie travel bubble burst. Elsewhere South Africa grappled with delta variant. However, these two concerns couldn’t derail the oil momentum, we believe. The current commodity rally seems to follow the Fed balance sheet. According to the CFD, the CRB index increased 25% since the beginning of 2021, reported by Tradingeconomics. And Brent crude oil rallied nearly 50% during the same period-occupied 2nd place on top of the energy basket. 

ANZ: The group is faced with some pressing issues as it reviews its production agreement. Increased travel and strong economic growth are likely to see the recovery in demand accelerate.

Refinitiv cited that India again urges OPEC to phase out oil output cuts. In a report, Reuters reported, ”Indian Oil Minister Dharmendra Pradhan on Thursday again urged the Organization of the Petroleum Exporting Countries to phase out crude output cuts as high prices are stoking inflation.”

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