EIA meets to discuss stocks release
Earlier in the week, we had a report that Vladimir Putin ordered the central bank to find a way to get the Oil and Gas payments in the Russian Ruble, instead of USD and Euro. This process is supposed to start today, April 1.
Mr. Putin said "If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped."
This order increased the tensions in the market and US crude Oil prices all way up above $108, before Biden's order pull it down again under $100. At the same time, since it means more demand for Russian Ruble, Ruble almost re-gains all it loses to trade at around 83 against US Dollar.
The Russian request seems ignored by European companies and governments. They claim that all their current agreements are in Euro and they are not going to pay in Ruble. Following the European reaction, Russia told it would stick to its obligations on all contracts as long as other sides also are respecting Russian interests.
Joe Biden on Thursday announced a release of 1 million barrels per day for six months, which is supposed to start in May. This largest release ever from the Strategic Petroleum Reserve (SPR), has put pressure on WTI price to move under $100 last night. Today, while IEA members met to discuss further emergency oil releases, the market was cautious. However, the latest reports can not confirm any specific decision that may change the market environment. We already know that global reserves are already low and many countries used some parts of their inventories already, so we can not count so much on them.
After falling by 5.6% on Thursday, and 3% earlier today in the Asian markets, in the last hours it is already recovered most of its today's losses to trade near to $100 to print a 0.3% daily gain so far. Even though WTI is going to print a weekly loss of about 10%, still, it is trading at a very high level to keep the concerns high.
We should not forget also that OPEC+ (Organization of the Petroleum Exporting Countries and allies including Russia), on Thursday stuck on their current plan for an increase of 432,000 barrels per day to their May output target and ignored the Western pressure to increase the output levels.
In short, the Russian decision may end with the withdrawal of part of Russian oil from the market, but US 1M barrel per oversupply also can not replace the market shortage. Therefore, a downtrend in the Oil prices is not something that for now can count on that, unless geopolitical tensions reduce.
At the time of writing, West Texas Intermediate (WTI) crude futures is trading at $99.40. In the daily chart, as you can see in the bellow figure, it breached already the trend line, however still way above its key resistance at $92.
In the H4 chart, diversion between the higher band and lower bank of trend is increasing. With lower market volume, we can say that bears losing their powers under $100. In the H4 chart, the next support sits at $94.65 with the pivot point at $102.84.
