Noor Capital | Interview with Mohammed Hashad on Dubai TV – February 13, 2023

Mohammed Hashad, Head of Research and Development at Noor Capital and member of the American Association of Technical Analysts, commented on the most important developments in the financial markets during the past trading week, and shed light, in an interview on Dubai TV, on the expectations of US inflation data, expected on Tuesday, February 14.

Oil

Asked about how the recent Russian decision to cut oil output by half a million barrels would influence crude oil prices, particularly after OPEC + alliance announced that the Cartel does not intend to compensate for this deficit, Hashad explained that Russia has now become a major player in the global oil markets, and analysts must monitor all decisions taken by Moscow, adding that “markets have already seen big movements and strong rises in crude oil prices, which recorded remarkable gains of more than 3%, and the Russian side surprised the markets with the possibility of reducing output by about half a million barrels per day, equivalent to 5% of Russia’s output, which had a significant influence on oil prices, which jumped to the $80 level, and then fears returned in the markets about the problem of oil and energy shortages, and as a result, the markets witnessed a rise in crude oil prices during the past week, and we can now say that the influence of this Russian news was largely positive in the context of Moscow’s response to Western sanctions”.

Is oil price looking to new horizons?

Another question is closely related to oil as well, specifically the expectations of specialists that crude oil prices could reach $100 a barrel during the current year 2023, and whether such expectations could be possible, and whether there are realistic data indicating the possibility of oil rising to $100, Hashad pointed out that these expectations, in light of the current data, are possible and markets may witness in light of the continuation of political and geopolitical tensions and the continuation of the conflict between Russia and Ukraine, but there is another reason as well, which is the reopening of the Chinese economy, as China is the second largest consumer of oil in the world, denoting a potential rise in global energy demand, and markets have already noticed how the Kingdom of Saudi Arabia bet on the opportunity provided by the reopening of the Chinese economy, so, Saudi Arabia began to raise the prices of oil shipments intended to be sold to Asia, and it is also betting on the influence and weight of the return of Chinese demand for oil, therefore this is one of the reasons that may lead to surging oil prices that could be trading around $100, it is even possible for it to exceed that to jump to the $110 level during the year 2023.

Concerning how long would that take, for oil prices to move upwards towards $100, Hashad believes that this will be possible as soon as the major central banks worldwide begin to decide interest rate cuts or abandon the cycle of tightening monetary policy after the central banks approach the target levels of inflation. It is possible to happen during the second half of the current year 2023.

Gold Prices

Regarding gold prices, which are heading towards correction associated with the strength of the US dollar, but many are wondering about the possibility of gold rising to the level of $2,000 per ounce, whether this is possible from the point of view of technical analysis, Hashad commented, saying: “The current data in the markets indicate that it is In the medium term, gold may reach $2000, when the trend prevails towards the start of gradual interest rate cuts or ending the monetary policy tightening cycle by major central banks, after inflation is controlled, and markets may also see an ounce of gold trading around $2000 with the continuation of political tensions, as the precious metal is considered a preferred safe haven for investors, and therefore it is not excluded that gold will trade around $2,000 per ounce, but the current movements also indicate some decline in gold prices as a result of the dollar’s performance.

Consumer Price Index Data

While the financial markets are awaiting the US inflation data expected to be announced on Tuesday, most of the expectations are likely to raise the federal interest rate, and in response to a question about the maximum limits that can be expected regarding the next step by the Federal Reserve, Hashad indicated that expectations and speculations rose to support the possibility of hiking US interest rates up to the accumulate 6% level, and as markets are awaiting inflation data, this week, the United States may witness a high reading of inflation data and the continuation of raising interest rates. Inflation has reached 2% and the Fed is determined to combat and control inflation to the target level, however, bringing inflation to the target level will not be achieved unless the level of demand declines.