Oil Traders Increase LongsThe latest CFTC COT institutional positioning report shows that oil traders increased their net long positions last week in oil. On the back of recent sales, the uptick in upside exposure last week reflects the higher outlook for oil prices in the wake of Russia invading Ukraine. The violence in Ukraine has fuelled a strong rally in oil prices, which looks set to continue near-term as the war continues.Ukraine Violence Driving The RallySince the invasion was launched on 24th Feb, oil prices had spike over 40%, trading up from around the $91 level to around $130 at their peak. We’ve since seen a sharp correction lower, however, with prices falling back down to around £112 as of writing. The move lower comes in response to news that OPEC+ is considering raising its oil output above schedule in a bid to combat higher prices. Global leaders have long been calling for the cartel to accelerate its oil output though, up until now, the group has resisted these calls.US Bans Russian OilThe conflict in Ukraine has become a major focal point for markets and world leaders alike. With oil prices surging, the West is caught in a very difficult position as it seeks to punish Russia via sanction, while suffering the cost of higher energy prices. The US administration announced this week that it is banning the import of Russian oil and gas. This will in turn put even greater pressure on domestic supply at a time when producers are already struggling to keep up with demand.EIA Upgrades Price ForecastsIn its latest Short Term Energy Outlook issued this week, the EIA has significantly upgraded its oil price forecast for the year. The group now sees oil ending the year around $105 per barrel, around $22 higher than the previous forecast. The group noted fresh upside risks around the conflict in Ukraine, occurring at a time when commercial crude inventories are already at heavily depleted levels.Technical ViewsCrude OilOil prices have recently recoiled sharply from the test of the $130 level with price now sitting on support back down at the 106.05 level. However, with both MACD and RSI still bullish, and with price still well above the recently broken bull channel, the outlook remains bullish. To the downside, any further dip lower from here will put focus on the 95.93 level and retest of the broken channel.
Source: Tickmill
