Oil PlungesAnother week comes to a close in financial markets and it’s been another week of hoping the violence in Ukraine comes to an end. While, sadly, that doesn’t seem to be the case for now, we have at least had plenty of interesting market moves to be focusing on. Chatting with traders this week, it seems the main market development capturing attention ahead of the weekend is the roughly 20% drop in oil. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! And if you didn’t? there’s always next week!What Caused The Move?OPEC to Raise OutputOver the last nine months there has been a big push from global leaders calling for OPEC+ to raise it oil output. Soaring energy prices have become a major headache for the global economy, putting undue stress on consumers and raising costs for manufacturers, all of which is leading to big upward pressure on inflation. While OPEC+ has so far resisted called to raise its output, citing its intention to follow a steady path of gradual output increases, the group is now reportedly considering such a move, in light of the war in Ukraine.The crisis in Ukraine has caused strong upward pressure on oil prices with crude rallying around 40% since the violence began. With global leaders making even more passionate pleas for OPEC to increase its output, it seems the oil producing cartel, along with allied non-OPEC producers, is finally on the verge of stepping up its output. Along with Western leaders, we’ve heard the UAE this week calling for OPEC to step up output as it too begins to feel the pain of higher energy prices.IEA Oil Reserve ReleaseAlong with hopes of a move from OPEC he IEA recently conducted a co-ordinated release of strategic petroleum reserves in a bid to bring down prices. With the ongoing crisis in Ukraine, global leaders are firmly rallying to try and bring prices lower. However, it remains to be seen whether the current correction is just that, or the start of a meaningful decline. Given the risks of a further escalation in the violence, it would seem that until OPEC makes an official announcement, risks are to the upside for oil.Technical ViewsCrude OilThe pull back in crude has seen the market trading back down to the 106.05 level, which is holding as support for now. With both MACD and RSI still bullish, the focus remains on a continuation higher near term with 114.71 the next upside level to break. To the downside, any further move lower will put the focus on 95.93 next and a test of the broken bull channel .
Source: Tickmill
