2022/02/15 (003) Technical Analysis – UKOIL

Toxic mixture for stock markets: „War fear and oil price shock“. Oil prices more or less round about 100 USD, accelerates inflation even faster…


Driven by the economy, shortages and the Ukraine crisis, the price of oil is rapidly heading towards 100 dollars, dragging the costs of fuel and heating oil up with it. Yesterday, on Monday, a barrel (159 liters) of the North Sea variety Brent, which is important for Europe, was traded at up to 96 US dollars. This is the highest level since autumn 2014. Fuel is currently even more expensive than ever: According to the german auto car club ADAC, premium grade E10 petrol cost 1.739 euros per liter on a nationwide daily average on Sunday. With diesel it was 1.655 euros. Both are highs. The increase in heating oil is also noticeable: the information portal Heizoel24 gave the average price for a delivery quantity of 3000 liters on Monday at 93.50 euros per liter. This is just below the peak values values from 2007 and 2012.

The main driver of this development is the price of oil.
According to experts at Dekabank, it has risen by around 25 percent since the beginning of the year alone, and by as much as 50 percent over the year. Experts cite three main reasons for this; two more long-term and one short-term. The short-term price driver is tensions on the Ukraine-Russia border. Oil prices are becoming more and more responsive to developments, as Russia is one of the world’s largest oil producers. “If there is a military escalation, the West can expect far-reaching sanctions against Russia,” says commodities expert Carsten Fritsch from Commerzbank. Should these sanctions affect the energy sector, crude oil supplies could also be affected.

The same applies to natural gas, the price of which has also risen sharply recently. According to Fritsch, „Russia is the largest exporter of natural gas in the world.“ Oil market expert Jürgen Albrecht from ADAC also expects prices for oil and fuel to rise significantly again in the event of an invasion. The two longer-term drivers of oil prices are supply and demand. There is a general shortage of supply on the market – mainly because the oil association Opec+, led by Russia and Saudi Arabia, has not met its production targets for months. The reasons for this include production bottlenecks in smaller OPEC countries like Angola, but also in larger countries like Iraq. This is countered by an increasing demand. Even if the corona pandemic continues, many restrictions on economic life have been lifted.