Today’s Spotlight Market
Crude Oil futures rose sharply yesterday, as negotiations between Russia and Ukraine may lead to a ceasefire.? Improved stability could significantly improve the economic outlook for the region, which, in turn, could improve Oil demand in the region.? A ceasefire may not abruptly bring an end to the conflict, but this is definitely a step in the right direction.? Meaningful progress could also lead to a loosening of European sanctions on Russia.? There was never a question of Russia cutting off petroleum to the West, as the country?s economy is dependent on energy exports ?
Fundamentals
In addition to the progress between Russia and Ukraine, Oil traders have been a bit more upbeat on the demand outlook.? Tuesday?s US manufacturing and construction data came in better than expected.? The EIA also reported that the 4-week average Crude Oil demand figure reached 19.8 million barrels per day in the period ending August 22.? This is the highest average for the period since 2008.? Upcoming refinery maintenance, ahead of colder weather, does slightly put a damper on the demand outlook.? Traders may have already accounted for this, but it does take away from the momentum the oil market has been building.? The Buzzard oil field in the North Sea has been shut down for a few days, which offered a brief reprieve to Brent Crude Oil prices, which found themselves under more pressure than the WTI contract.? If the field comes back online, the spread between the Brent and WTI contracts could narrow further.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the October Crude Oil contract trending lower, but holding above 92.50 thus far.? The 91.50 support level could be viewed as critical near-term support.? Failure to hold this support level could result in prices approaching the 85.00 level.? The RSI indicator has recovered from oversold levels, but has not yet ventured too far into neutral territory to this point.? The momentum indicator has turned up and is edging toward the zero line.
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