Oil prices stayed high as the Russian crude shortage

28 March 2022, 02:44

Market Focus

US equities markets were mixed on Friday while investors continued to digest the developments in Ukraine and the interest rate hike. The Dow Jones Industrial Average added 0.44% and the S&P 500 climbed 0.51%. The Nasdaq Composite ended lower, down 0.08%, following the decline of most major tech companies. March’s employment report is coming up in the week ahead. However, this is currently outweighed by, inflation data, crude oil prices, and the development in Ukraine, all of which are steering the current markets.

During a sweeping speech in Poland, US president Joe Biden noted that Russian leader, Vladimir Putin, cannot remain in power due to his invasion of Ukraine. In the meantime, Biden further attempted to ratchet up international pressure on Russia. Other than addressing the international events, Joe Biden also proposes a new 20% minimum billionaire tax. The proposal would impose a 20% minimum tax rate on US households worth more than $100 million.

Crude oil prices continued to advance on Friday following the news that an oil storage facility in Saudi Arabia was under attack by Yemen’s Houthis. Over the weekend, the authorities from Saudi Arabia confirmed an attack on Aramco. The last time that Aramco facilities got attacked was in 2019, resulting in a cut of half of the daily oil production.

Main Pairs Movement:

Gold was nearly flat, up 0.01%, on Friday as concerns over inflationary pressure offset the aggressive move from the Fed. Looking ahead, the volatility of gold would briefly return as the focus now shifts to March’s NFP employment report.

Crude oil prices kept upside on Friday. WTI was up 1.19% and Brent crude oil added 0.86% at the end of the day. Oil prices stayed high as the Russian crude shortage continued as an oil storage facility in Saudi Arabia was attacked by Yemen’s Houthis.

EURUSD and GBPUSD both saw little change. EURUSD was down 0.13% whilst GBPUSD was down 0.04%. Economic data from Germany and Europe both came in slightly above the expectations. However, the private sector’s business activity had lost its growth momentum due to the disruption of supply chains.

Technical Analysis:

GBPUSD (4-Hour Chart)

Cable traded sideways for the most part on the last trading day of the week. Revived strength for the dollar has limited any upward movement for Cable. The U.S. 10-year Treasury yield reached 2.5%, helping the Dollar climb back from the week’s low. On the economic docket, the U.S. and U.K. are scheduled to release GDP figures on Wednesday and Thursday respectively.

On the technical side, Cable remains trading below our previously estimated resistance level. RSI for Cable sits at 44.67 as of writing. On the four hour chart, Cable is trading above its 50 and 100-day SMAs but below its 100-day SMA.

Resistance:  1.3282

Support: 1.3131, 1.3018

EURUSD (4-Hour Chart)

EURUSD traded lower on the last trading day of the week. After the EU summit, no new sanctions were announced as of the 25th, but Germany continues to raise concerns over the economic impact that the shared economy would face with the current economic sanctions imposed on Russia. In particular, Germany is still concerned over the soaring energy prices and the consequences of barring Russian energy imports. On the economic docket, Germany is due to announce its March unemployment changes on the 31st, while the EU would announce its CPI data for March on April 1st.

On the technical side, EURUSD has retraced back to our previously estimated support level of 1.0985 and is consolidating around the price level. EURUSD has also broken out of our projected upward trend. Thus, the pair is subject to possible further losses in the near term. RSI for the pair sits at 42 as of writing. On the four hour chart, EURUSD is trading below its 50, 100 and 200-day SMAs.

Resistance: 1.1127

Support: 1.0985, 1.0845

XAUUSD (4-Hour Chart)

Gold continued its second day of gains to close the week in positive territory. Despite the Dollar’s revived strength, the precious metal continues to attract buyers as the war between Ukraine and Russia officially reached the month-long mark. With president Biden pledging a $1 billion security package to Ukraine, market participants are speculating a possible escalation of tensions as Russia’s inability to swiftly capture Ukraine could pose psychological and political pressure on President Putin.

On the technical side, XAUUSD has formed a new resistance level around the $1964 per ounce price region. Support levels are still firm with no near term threats. RSI for XAUUSD sits at 57.96 as of writing. On the four hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMAs.

Resistance: 1947, 1961

Support: 1918