Gold Market Wire
News, analysis and commentary for gold traders and investors
Crude Oil Update
Crude Oil Touches Down on the Horizontal
February 25, 2022 - (Gold Market Wire) - Crude Oil has settled down after yesterday's strong move higher on the back of the Russian invasion of Ukraine. We are now right on the $100/bbl mark, having touched down on the horizontal line marked out in our chart, below:
We are now entering a period where the constant stream of news can buffet the headlines systems of the wire services and cause mayhem in the markets. In cases like this the best strategy is to keep positions small, and be able to hold on for some wild rides.
It's our take here that the Russian invasion of Ukraine is likely to be the opening salvo in a much longer, protracted, war that will be extended in time, geography, and sadly ferocity. Make no mistake, the omens for a World War are rising, and the situation is bleak. That will likely mean higher Crude Oil prices. If there is a major military mobilisation, we can expect oil prices, and especially jet fuel rices, to rise sharply for an extended period.
The price 'collapse' will come only when hostilities appear to be ending. That doesn't seem to be in the offing anytime soon. Moreover, were Russia to consolidate its position in Ukraine and neutralise opposition, would that just be an intermezzo to the start of a wider war? That is likely. China must, surely, now see an opening to invade Taiwan. They will likely never get a better one. Moreover, with the Chinese economy under significant pressure, a war would "make sense" from Xi Jiping's own personal political calculus. That would leave the USA/West with a dual remit. And a difficult one at that. Russia could soon turn oil production towards a Chinese war effort, while restricting supplies to Europe and Scandinavia. If the West is to impose sanctions on Russia, one would assume the reverse would also be true i.e. - domestic US production would be earmarked for a war effort. That would be an energy Battle Royale.
All on can surmise from the current state of affairs is:
1) Conflict is now going to be protracted, and could easily expand.
2) Oil is likely to go a lot higher.