Crude Oil Holds High Ground Amid Commodity Bedlam as USD Pauses. Where To For WTI?

CRUDE OIL CHART


Crude Oil, US Dollar, Nickel, LME, WTI, Brent, Gold, VIX – Talking Points

  • Crude oil prices remain elevated in geopolitical shootout
  • Volatility is all pervasive, especially in commodities and equities
  • With continuing uncertainty,will USD resume its uptrend?

Crude oil is sought after with the US confirming that they will ban Russian energy. The UK followed suit for crude but will still allow gas and coal imports.

The WTI futures contract is above US$ 126 bbl and Brent is above US$ 130 bbl. All other energy futures are higher through the Asian session.

Gold is also approaching an 18-month high after hitting US$ 2,070 an ounce overnight.

The action in the nickel market continues to reverberate through commodities as backwardation remains all pervasive. Backwardation indicates eagerness of the market to take immediate delivery rather than wait.

Nickel traded on the London Metals Exchange (LME) will remain closed at least until the 11th March.

Currencies reversed some of the big moves of earlier this week with the Japanese Yen and US Dollar giving up some ground while the Euro and Norwegian Krone picked up a touch.

Wall Street ended up posting only relatively small loses from their cash session, but volatility remains high as the day saw a wide trading range.

The VIX index, a measure of anticipated volatility on the S&P 500, remains at elevated levels. It closed at 35.12, well above the average for the last year of 20.07. Futures are pointing to a modest gain for the US indices when they re-open today.

APAC equities were mixed with Chinese and Hong Kong indices losing ground while Australia and Japan ticked up slightly.

Chinese CPI came in at 0.9% year-over-year to the end of February as forecasted and the same as January’s print. PPI came in at 8.8%, instead of 8.6% forecast and 9.1% previously.

Bonds have been steady in Asia after yields ticked up again overnight. The 10-year Treasury note is currently yielding 1.85% at the time of going to print.

The credit rating agency, Fitch, said today that they expect Russia to imminently default on their bonds. This comes on the back of their rating cut last week, joining Moody’s and S&P.

JPMorgan removed Russian bonds from their bond indices overnight. Russian equities have been removed from all the major indices.

The Western world has closed its capital market to Russia. Exactly how investors will retrieve cash for their existing holdings remains unknown.

Looking ahead, the US will see mortgage numbers later today before the all-important CPI figure tomorrow.

The full economic calendar can be viewed here.

Crude Oil Technical Analysis

Crude has rocketed higher and volatility has expanded rapidly as shown by the incredible widening of the 21-day simple moving average (SMA)based Bollinger Bands.

The positive gradient of the 10, 21, 55 and 100-day SMAs and might indicate that bullish momentum is intact.

Resistance could be at the highs of the two previous days at 129.44 and 130.50.

Support may lie at the previous low of 105.18 or the 10-day SMA, currently at 108.60.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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