LCrude=VUCA: Resurgence of Volatility without Strength

1 kwi

VUCA= volatility, uncertainty, complexity, and ambiguity

During the Asian session, the price of LCRUDE crude oil experienced fluctuations, ranging between $82.93 and $83.05, with a slight decrease of -0.45%. However, with the opening of the European market, the price began to recover. Factors such as expectations of cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), attacks on Russian refineries and relatively positive Chinese manufacturing data boosted the price of crude oil, as well as gold, during the start of the European session.

With several markets closed due to the Easter holidays, low trading volume is expected. Both West Texas and Brent have seen increases for the third consecutive month, with Brent rising above $85 a barrel since mid-March. This is partly due to OPEC+'s commitment to extend production cuts until the end of June, which could reduce crude supply in the northern hemisphere during the summer. Already on Friday, Russia's Deputy Prime Minister Alexander Novak stated that its oil companies will focus on reducing their production rather than expanding exports during the second quarter of the year, in order to share those cuts evenly with other member countries.

On the technical side, the price of crude oil has shown an upward trend since the end of March, driven by divergences in Russian production caused by the Ukrainian conflict and the demand for U.S. reserves. At the European opening, the price has turned around, devaluing to $82.68 per barrel. Certainly crude oil is in a trading zone frequented on several occasions this year. At the moment the chart is trying to pierce the top of the current range, and with such a low trading level, there could be a lackluster rally due in part to the impact of news, just as it did during the Asian session. Conversely, the price bell is showing a control price (POC) at $81.04 which could represent that inability to move higher due to the lack of strong hands pushing the "Bulls" in the market during the holidays. suggesting that crude oil could continue to fluctuate in a range between $83.08 and $79.80. We will have to be vigilant, as although the news presents a theoretical bullish pressure, the technical elements show us a strong bearish pressure that seems to prevent the effect of the news from materializing.

Ion Jauregui - AT Analyst




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