Crude Oil, US Crude (WTI), Brent Talking Points
- Crude oil prices surge as Russian troops invade Ukraine
- Brent crude breaks $100 per barrel, is WTI next?
- Higher energy costs exacerbate fears of rising inflation placing the Fed under additional pressure
As Russian troops continue to sweep through Ukraine, fears surrounding the consequential effects on energy prices have boosted demand for commodities, pushing oil to yet another fresh seven-year high.
With global leaders now looking to impose more stringent sanctions against Russia, the third largest oil producer and a major supplier of gas has posed an additional threat to policymakers who are already struggling to gain control over inflation.
While approximately one-third of Russia’s gas exports to Europe bypass the Ukraine, elevated geopolitical risks and fears of further supply constraints have supported the upward trajectory pertaining to both WTI and Brent, making prices vulnerable to further developments in the situation.
US Crude Oil (WTI) Technical Analysis
WTI has recently treated below channel support as prices edge closer to the $100 mark. As support holds firm at the $95.85 Fibonacci level, the geopolitical backdrop will likely continue to hold as investors price in the probability of increased supply constraints.
As the CCI (commodity channel index) remains in overbought territory, rising tensions could see WTI retesting the upper bound of the channel with an opportunity to test the 2014 high at around $107.
US Crude Oil (WTI) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
| Change in | Longs | Shorts | OI |
| Daily | -4% | 5% | -1% |
| Weekly | -27% | 113% | -6% |
Brent Crude Technical Analysis
A significant surge in the price of Brent crude allowed bulls to finally break free of both channel and Fibonacci resistance with prices soaring above $100 per barrel before peaking at around $105.
Given the extent to which Europe relies on Russia for its energy resources, the decision to halt the Nord Stream 2 pipeline project (the project designed to transport gas from Russia to Germany) has raised additional concerns over further disruptions to the already constraint oil supply.
Brent Crude Daily Chart
Chart prepared by Tammy Da Costa using TradingView
As with WTI, the CCI (commodity channel index) for Brent crude has risen into overbought territory with a break of $105 bringing the next zone of resistance into play at around $111. If bulls are able to maintain control above this level then a test of $120 may be probable in the foreseeable future.
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
