Peace Talks Weigh on Crude
The prospect of Russia-Ukraine peace-talks is having far-reach market implications on Thursday. Oil prices have been among the big movers with crude futures now testing YTD lows and looking vulnerable to a fresh decline. An end to the war would remove a lot of risk to crude distribution lines, improving overall supply, particularly if the Hamas-Israel ceasefire holds too. Additionally, though this could be further off, the prospect of the removal of US sanctions on Russian oil could also have significant ramifications for the supply environment. In recent weeks, oil prices has been higher amidst supply tightening in the market. However, this dynamic is now weakening as traders look to the prospect of a Russia-Ukraine peace deal.
EIA Inventories Surplus Adds Pressure
Alongside news of the phone-call between Trump and Putin and the prospect of a peace deal, oil prices have also been hit by a build-up in US crude inventories. The EIA reported a 4.1-million-barrel surplus over the prior week, almost double the market forecast, reflecting a drop in US demand. This data alongside the prospect of an improved supply environment is likely to keep oil prices skewed lower near-term. Additionally, any incoming news linked to movement regarding Ukraine-Russia peace talks should amplify selling. As such, this story will now be of central importance to traders meaning also that oil prices are vulnerable to a spike higher on any news that peace talks have faltered or been abandoned.
Technical Views
Crude
The sell off in crude has seen the market falling back below the 72.61 level. While below here and with momentum studies turning lower, focus is on a test of the 67.45 level support next. This is a major level for the market, having underpinned price action over the last two year and a break below will be firmly bearish, opening the way for a deeper push.
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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.