Ukraine Crisis ?Putin? a Charge into Oil Prices
?Today’s Spotlight Market
The political turmoil in the Ukraine has shifted from a violent internal conflict into an international one.? Russia, the Ukraine?s neighbor and world?s largest Crude Oil producing nation, has seized control of the Black Sea region of Crimea.? This brazen act not only violated Ukrainian sovereignty, but also puts the US and Russia at the worst political standoff since the end of the Cold War. Russia has threatened to invade the Ukraine to ?protect Russian citizens.?? This is a rather alarming move seen by many as a way to consolidate power and keep the Ukraine within its sphere of influence.? The conflict threatens to disrupt petroleum outflows from Russia.? The US has already threatened to remove Russia from the G8, and the White House is weighing its options to punish Russia economically.
Fundamentals
The geopolitical news from the Ukraine has been a major driver for the Crude Oil market.? Other news has not been as bullish.? Chinese manufacturing PMI fell to 50.2 in February, which is slightly higher than the consensus estimate of 50.1, but is at 8-month lows.? On the surface, the People?s Bank of China, or PBOC, has been lowering interest rates.? However, evidence from the manufacturing sector suggests that banks have been tightening.? The Crude Oil market may find itself vulnerable when the crisis in the Ukraine is sorted out.? Given how Russia has dug in, the conflict may drag out for an extended period of time. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the April Crude Oil contract breaking out of a pennant on the daily chart, suggesting a continuation of the recent uptrend.? This comes on the heels of confirming a double-bottom formation.? The measure of the double-bottom suggests prices may test the 108 level or, possibly even the 110 mark on the upside.? The RSI indicator remains overbought, which could weigh on prices in the near -term.
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