Jump to content

Crude Oil Spikes to a Near 14-Year High on Russian Supply Fears


Recommended Posts

Crude Oil Price, Chart, and Analysis

  • Crude oil prices continue to soar on supply fears.
  • Europe is dependent on Russian energy flows.

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

Crude Oil Spikes to a Near 14-Year High on Russian Supply Fears

Brent crude touched its highest level in nearly 14 years earlier today as news filtered through the market that the US is leading talks to ban the import of Russian oil and energy in a further attempt to tighten a fiscal noose around President Putin’s war in Ukraine. The ongoing supply shock, and the decision by OPEC+ to not increase production further last week, have seen oil on a one-way trajectory of late with little in the way of stopping the rally. The US is said to be approaching Saudi Arabia to increase production, while last week’s there were rumors that any Iran nuclear deal would also see additional supply hit the market.

A ban on Russian oil and gas imports would hit economies around the globe, with the EU likely hit the hardest. The single block imports around 27% of its crude oil from Russia, along with 46.7% of its solid-fuel requirements and 41% of its natural gas needs, according to 2019 Eurostat data. The European stock markets have been reflecting this risk in with the DAX down from Jan 2022 high of 16,300 to a current level of 12,580, while the French bourse is down from just under 7,400 to a current level of 5820 over the same time frame.

The monthly oil chart highlights the speed of this year’s move in brent and how vulnerable the July 2008 high is. Moves of this speed should be treated with caution as even the best laid out and analyzed trade set-up can be run over by a rogue headline or rumor.

BRENT CRUDE MONTHLY PRICE CHART MARCH 7, 2022

Crude Oil Spikes to a Near 14-Year High on Russian Supply Fears

 

If we look at US Crude Oil, IG retail trade data show 43.49% of traders are net-long with the ratio of traders short to long at 1.30 to 1. The number of traders net-long is 21.13% higher than yesterday and 5.36% lower from last week, while the number of traders net-short is 13.63% lower than yesterday and 28.83% higher 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 less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias.

image.png

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

 

Mar 7, 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...