FIS Crude Oil Market Overview: EU to step up sanctions against Russian oil
Crude oil prices rallied again as the European Union (EU) seemed set to step up sanctions against Russian energy products for its attack of Ukraine.
The ongoing conflict had resulted high numbers of casualties with estimated of around 6.5 million people displaced in Ukraine since the start of the invasion in late February.
Although peace talks had been held between the two countries, no ceasefire has been agreed, thus the EU are looking at possible tougher sanctions on Russian exports like oil and gas, as Russian military forces inched closer to capture Kyiv, the capital of Ukraine.
However, EU’s largest economy, Germany seemed reluctant to impose sanction on Russian energy exports, though the country had recently sealed gas deal with Qatar to reduce their dependency on Russian gas.
On the global market, the informal boycott of Russian energy products has continued, though Chinese and Indian oil firms had no qualms to snap up the underpriced Russian products, while Turkey had no plans to suspend their procurement of Russian oil either.
Besides the tougher sanctions on Russian oil, Saudi Arabia’s oil facilities were attacked by Houthi militia that resulted in the temporary reduction of refinery’s production by the Yanbu Aramco Sinopec Refining Company (Yasref) facility.
However, the refiner will fill the supply gap by drawing down from its inventory while repairing its damaged facilities at the same time.
With crude prices above the $100/bbl again, US shale oil producers may be on the move again to restart their operations, as most producers are expected to generate significant profits with oil price at more than $80/bbl.
Despite the high Russian oil yearly production, the discharge rate has been poor in Mar 2022, as most EU countries shunned Russian energy products in protest of its invasion of Ukraine.
Saudi Arabia’s oil producers continued to do the heavy lifting for the OPEC production after achieving a weekly growth of 28% and yearly gain of 38.2% by Mar 18.
Technical view of the crude oil market:
May Futures – Last week we highlighted that the futures have potential to trade a little lower with a near-term target of USD 100.60. If this level held then we had the potential for a bullish Gartley pattern. The price did trade below this level (low USD 96.93).
However, we still had the correction as a wave 5 of a wave C, meaning the futures were not considered a technical sell as we were nearing phase/cycle completion. This suggests market buyers would be on the sidelines waiting for buy signals.
The futures are now at USD 115.00, having rallied USD 18.00. The upside move above the USD 113.91 means the technical is back in bullish territory. We now target the USD 118.36 and USD 133.15 resistance levels.
Technically bullish, downside moves that hold at or above USD 103.07 will support a bull argument. Below this level the futures will have a neutral bias.
Written by Titus Zheng Shujian and by Edited by Chris Hudson (https://freightinvestorservices.com/fis-live/).
