If someone does not believe that there is a crisis, look at the commodities market. Gold, traditionally considered by investors as a safe-haven asset, is growing by leaps and bounds and flirting with the psychologically important mark of $2,000 per ounce, while Brent is falling into the abyss. But oil is a kind of indicator of the global economy's health; its decline signals that all is not well with the economy. When banks suffer, credit suffers as well; optimism about GDP growth fades, and demand for oil slows down. Is it any wonder that North Sea futures quotes have fallen?

The "bearish" conjuncture of the oil market is finishing off the last optimists. Goldman Sachs, which previously expected Brent to rise to $100 per barrel as early as 2023, abandoned its positive forecast. Obviously, demand is not as strong as previously thought, China is not recovering at a cruising speed after exiting the COVID-19 related lockdowns, and the recession in the U.S. will come earlier than expected.

Dynamics of oil and gold

The situation with the supply is no better for the "bulls" in the North Sea variety. It seems Russia was just scaring the West and other countries by cutting production by 5%. According to trade sources and Reuters estimates, exports of Urals, KEBCO and Siberian Light from Russia's western ports will increase by 9% in March compared to February.

Moscow has found someone to sell its oil and other goods to. According to Chinese customs, China imported 7.69 million tons of crude oil from Russia in February, equivalent to 2 million bpd. It overtook Saudi Arabia to become the largest oil supplier to Asia's largest economy. By comparison, Riyadh's supply in February dropped 29% month-on-month to its lowest level since June.

Dynamics of Chinese oil imports from Russia and Saudi Arabia

Obviously, the main reason for the change of partners was the price. Russia is reducing it and getting new contracts. The same can be said for U.S. oil exports to Europe. Due to the difference in price between Brent and WTI, and the reduction of demand by U.S. refineries, oil supply from the U.S. to the EU in March reached a record high of 2.1 million bpd.

Thus, the global supply is not declining, but on the contrary, is increasing, and the dynamics of world demand leaves much to be desired. Not surprisingly, the market is in surplus, oil stocks are growing, and prices are falling. Their stabilization requires that the topic of the banking crisis in the U.S. and other countries disappear from the front page of the news, and China's attitude towards Russia should change for the worse.

Technically, on the daily chart, Brent is trying to find the bottom near the $71.5 per barrel pivot point. If the price bottoms out, we will need to fix profits on short positions formed from $79.2. If not, there will be an opportunity to build them up in hopes of continuing the peak to $67.5 per barrel.