The last few weeks have been incredible for crude oil. Despite China’s lockdowns, risk aversion, and global growth worries, oil prices have been remarkably resilient. On Friday, it closed at a six-week high in what looked like it could be the break of a pennant. The price closed above previous highs, which means that the pattern of lower highs was broken.

Today, it’s a different story though. Ultimately, oil depends on healthy global demand, and the ongoing rout in equities isn’t painting that kind of picture. The decline in stock markets has resumed today. With that, WTI crude is now back to $105.35 from a high of $111.15 on Friday.

That messes up what had been a nice looking technical trade. As (almost) always, when the chart is too perfect, it doesn’t work. Now there’s the potential for a false breakout reversal. Or we continue to chop along in the $95-$115 range. In the latter case, I take that as a win for the bulls. Anything about $95 in this environment highlights supply shortages. The EU is considering dropping the ban on EU tankers moving Russian oil, we heard earlier today, which is a negative event for oil prices.

Reuters Reports

• EU’s new round of sanctions include oil ban but still missing agreement on investment in oil infrastructure, sale of property to Russians in Cyprus
• Considers more funds for oil infrastructure in eastern Europe in bid to get a deal

The bottom line here is that a deal is getting closer. That said, Russia’s real problem is transport. There are buyers for its oil all over the world and if they can get more tankers in ports, then they can continue to export.

US Crude Oil Daily Chart – WTI Heading Back Toward $100 Again

The bullish move in oil is over

FED’s Kashkari Comments on CNBC

• Concerns about energy prices resonate
• As energy prices stay higher longer, investors will see a good place to deploy capital
• Bad news is weighing on supply chains and inflation
• The Fed will change its approach if data comes in differently

• We have a strong job market
• Maybe there’s some evidence of inflation softening just a hair
• There’s a lot of room for home prices to slow down without falling
• We could see some softer wage growth to try to get to a more sustainable environment
• By the measure of 30-year yields, we’ve removed accommodation faster than we added it in 2020
• I still think there are workers are on the sidelines that will be pulled back in
• He’s quite concerned about what he’s hearing about supply chains

US WTI Crude Oil Live Chart