Oil has started moving again, threatening to exacerbate stagflationary pressures
Oil prices are moving again, with both USOil and UKOil charting a higher trough followed by a higher peak on their respective weekly charts. I.e. the longer-term has reaffirmed its uptrend.
Besides an already established reluctance for trading houses to deal in Russian oil, the EU is on the cusp of banning energy imports from Russia. Complete bans need unanimous support from all 27 members of the bloc. However, Hungary maintains that it requires three and a half to four years to move away from Russian crude.
Additionally, OPEC+ is sticking to its timetable to raise production. This position is despite calls to increase supply to counter surging prices.
The weekly stochastics (blue arrows) have turned up because supply will continue lagging behind demand. As a result, upwards momentum will be dangerously entrenched if they move above 80 and hold these levels (red rectangle). I.e., if this happens, stagflationary pressures will exacerbate due to the generated momentum from the supply side.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.