Can Oil hold the bulls?
With the escalation of conflicts between Ukraine and Russia, Oil prices jumped above $100, for the first time since December 2014. And now the question is about the future of this fast price move.
For a better understanding of future moves, we need to see the main factors that move the energy market. Usually, US inventories, OPEC, EIA, and IEA monthly records, and Geopolitical tensions are the main market drivers of the Oil market. Between all these mentioned drivers, geopolitical tensions are the most important factors for investors in the energy markets. Yesterday and today, we had the API and EIA weekly US inventory reports. Both API and EIA reports confirm more than 5 and 4.515M barrels increasing in the inventory levels. Usually, with increasing inventory levels, we can see the pressure on the Oil and Gas prices, while these reports were ignored by market participants since geopolitical tensions were in the spotlight for most investors.
One of the first reactions to this tension in the energy field was the German announcement about the Nord Stream 2. We had different news with different titles, however, we should not forget that this project is not even started yet, therefore in the short term, it can not add or decrease the production level. On the other hand, we have two weeks to the next OPEC+ meeting and even so, Russia is the main None-OPEC member, so any decision that can not support the Russian interest is unlikely to be passed. This is while Saudi Arabia also was suffering from the Budget Deficit and it can be a miracle now to solve all those problems. So, any idea of possibly increasing the supply level by OPEC+ to rebalance the market is unlikely.
Therefore, while western powers will try to stop the Russian with strict sanctions, however as Mr. Biden also warned, they will also have costs for the boycotters. All these together, tell us that even if the prices can not go too much forward, however bulls still will be there to stay for now.
From the technical point of view also, technical indicators remain bullish. MACD histograms are strongly above zero level, while market volume is above 20 DMA, to support the bulls in the chart.
