Opposite winds tend to neutralize each other, but they can also lead to extraordinary phenomena. Are storms and hurricanes looming over the market?
The two crude oil benchmarks (Brent and WTI) had already fallen by more than 6% on Monday, carried away by fears of a global economic slowdown and the erosion of Chinese demand due to the epidemic outbreak that the country is currently experiencing.
The proposed European Union embargo on Russian oil is currently blocked because it must be adopted unanimously by the 27 member states.
Hungary is the firmest opponent of this embargo, which would strongly threaten its energy supplies given that the country happens to be one of the most dependent on energy from the Russian bear.
The EU would be ready to adapt the sanctions package currently under discussion towards Russia. For example, by abandoning the ban on European tankers from transporting Russian oil, diplomatic sources indicated on Tuesday.
The ban on European tankers from transporting Russian crude was a problem for Greece, Malta and Cyprus, among others, which feared severe consequences for their shipping industries.
Indeed, it should be highlighted that Greece accounts for about a quarter of the world's tanker fleet.
In the end, it is more likely that the risk of sanctions and supply disruptions will outweigh demand concerns.
Trade Review
After a successful trade entry triggered at the beginning of the week during that oil drop, black gold recovered almost half of its previous two-day losses during the European session on Wednesday, in a ranging market.
Therefore, the initial stop can now be dragged to the next level to reduce the risk.
To be continued as the market progresses.
WTI Crude Oil (CLM22) Futures (June contract, daily chart)
WTI Crude Oil (CLM22) Futures (June contract, 4H chart)