Russia/Ukraine Uncertainty Boosts Oil
Oil prices are looking more buoyant this week, with crude futures continuing to extend gains following a recovery rally on Friday. Uncertainty linked to the escalating violence between Russia and Ukraine looks to be feeding into bullish sentiment here with traders eyeing potential supply disruptions. Ukraine’s use of a US long-range missile against Russia comes with serious risks as Russia warns over the potential for a nuclear retaliation. Given the precariousness of the situation, crude prices are rallying sharply on the view that supply lines are likely to suffer in coming months if violence continues to escalate.
China Demand Improving?
Crude oil sentiment is also being helped this week by news of improved demand out of China. Reuters today reported on Kpler data showing that China’s crude imports have risen back to near record highs this month while the country’s surplus was seen shrinking in October. The data contradicts many recent headlines regarding weak demand from China and is offering crude bulls some hope here.
EIA Data Next
Looking ahead, traders will be watching the latest EIA inventories data today for a view into US demand levels. Forecasts are for a flat reading following the prior week’s 2-million-barrel build. Yesterday, the API reported a roughly 5-million-barrel surplus. If a similar figure is seen today this could curb the current rally, particularly if USD continues to rally.
Technical Views
Crude
The market is currently ranging within a contracting triangle pattern along the lower portion of the bear channel. While 67.45 holds as support, a breakout higher is still viable. 72.61 will be the key level for bulls, with a break there opening the way for a higher run towards 77.64 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.