Jump to content

Crude Oil Jumps as Russian Troops Enter Ukraine, Oil Eyes $100 a Barrel


Recommended Posts

Crude Oil Price, Chart, and Analysis

  • Oil soars as Russia turns up the political heat.
  • Supply fears will likely drive oil prices ever higher.

Crude Oil Jumps as Russian Troops Enter Ukraine, Oil Eyes $100 a Barrel

For a list of all market-moving data releases and events see the DailyFX Economic Calendar

Russian President Vladimir Putin yesterday recognized breakaway Ukrainian republics Donetsk and Luhansk as independent and sent in troops, or in Russia’s words, a ‘peacekeeping force’, fueling fears that the conflict in East Europe will continue. Russia will now likely build military positions in these regions, increasing tensions in Ukraine, and adding to fears that Monday’s move was the start of a longer-term takeover of Ukraine. The US and Europe are set to announce sanctions shortly against the two separatist-run regions in Ukraine and will also target Russian interest in their regions.

Oil remains strongly bid in the current environment and will remain so, although it is unlikely that Russian oil and gas supply will be affected by any upcoming sanctions. Russia is the main EU supplier of crude oil, natural gas, and solid fossil fuels. In 2019 the EU imported 41% of its natural gas from Russia along with over 46% of its solid fuels and nearly 27% of its crude oil. Italian Prime Minister Mario Draghi stated last week that any EU sanctions should not target the energy sector, as the country tries to curb runaway energy inflation.

 

Brent crude currently trades around $96.50/bbl. a seven-year high and is closing in on the headline-making $100/bbl. level. While this level may act as resistance in the short term, it is unlikely to hold oil back for too long, especially if Russia disrupts supply in response to any sanctions. The monthly price chart shows Brent crude entering a multi-year period when oil traded in a $95/bbl. and $128/bbl.

BRENT CRUDE MONTHLY PRICE CHART FEBRUARY 22, 2022

Crude Oil Jumps as Russian Troops Enter Ukraine, Oil Eyes $100 a Barrel

If we look at US Crude Oil, IG retail trade data show 39.74% of traders are net-long with the ratio of traders short to long at 1.52 to 1. The number of traders net-long is 2.39% lower than yesterday and 12.32% higher from last week, while the number of traders net-short is 12.17% higher than yesterday and 5.32% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias.

What is your view on Crude Oil – bullish or bearish?

 

 

Feb 22, 2022 |  Nick Cawley, Strategist. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
×
×
  • Create New...