The Russian invasion of Ukraine has sent oil prices soaring. Even if the war comes to an end in the near-term, strategists at Wells Fargo believe the West will continue to shun purchases of Russian oil for the foreseeable future. Consequently, they forecast that oil prices will remain elevated in coming quarters.

We have upwardly revised our oil price forecasts and now envisage a Brent price of over $100 in the second quarter (previously $85). This is because Russia is likely to produce less oil as a result of the sanctions and the voluntary boycott of many buyers, which will tighten supply.

On the daily time frame, the market has fallen below the 61.8% fibo retracement zone which was located at $107.25 and currently trading in between the deeper retracement levels. The fundamentals have been supporting hikes in oil prices since a few weeks, as the escalations moved towards negotiations the Brent market decided to follow the technicals and complete its bearish correction before making any moves higher. Though the trend lines on intraday timeframes have been broken to the downside but the one on interday charts still prevail. This can become a reason for the market to continue its bullish trend. But the bullish wave has ended and the bearish one initiated with an impulse, so we will have to wait before taking any long term entries. This is a bullish short term trade based on the fibo level and the exponential moving average 200, that would technically provide a support to oil and a push to the upside. 

Brent Completing Awaited Bearish Correction

Mar 14 2022