Oil prices have surged this year and have recently pulled back from the highs. However, there are some factors right now that will heavily influence the price of commodities in the long term. And it's important that we go over them so when the time comes, we'll have a better understanding of how to trade oil more successfully in an uncertain time.
G7 Meetings & Oil
The Group of Seven meetings (G7) which is compiled of Canada, Italy, Germany, France, Japan, UK and US, come together to discuss political policies that of which include the energy crisis and the war in Ukraine. On top of the sanctions that are already in place on Russia, world leaders talked about placing a cap on the number of oil exports Russia can have. They also want to limit the number of imports Russia can have if the material/goods they purchase would contribute to their military.
With little hope of a ceasefire any time soon, commodities like oil and gold may continue to find upside after the national average price at the the pump touched just over $5 earlier this month. The decision on how to further punish Russia is still very much in the air, but it seems that all of G7 wants to keep the pressure on for the time being.
Powell's Testimony & Oil
Federal Reserve chairman, Jerome Powell, will helm the podium again on Wednesday to testify on recent changes/updates on the central bank's stance towards monetary policy and economic health. Investors now expect that the hawkishness by the Fed will continue regardless of how the economy performs.
This is only going to negatively impact the price of commodities. If the value of the dollar increases, oil will likely lose interest from traders. Powell does not want to take the blame for the soaring fuel costs, so he will try to stabilize oil at the very least with the hopes of leaving demand to a minimum.
OPEC & Oil
Countries are being pushed to up production, but some do not think that they will be able to meet quotas due to the rising interest rates and recession fears. This uncertainty around whether or not countries can generate enough to achieve the 648,000 barrels per day could jolt oil's price in the coming months.
Fears that the energy crisis will only get worse for now is a very real possibility. And it is very much impacting global markets and commodities. Here are some trade setups on USOil that can potentially capture the big moves to come.
Oil Trade Setups
Taking a look at the 1D timeframe, and oil is coming up for the second trading session in a row. Price recently crossed under a strong support trend line before coming back above it. The commodity could be ranging between two distinct levels that seem to capture the average price within the last several months since March. The chart shows a bullish target of just under $114 pb with a bearish target at $98 pb. Volatile swings are expected within the next few days as the events mentioned above will be occurring.
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