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Traders will be wondering if today’s move is a momentary respite in what has been an awful month for the commodity, or a change in sentiment. The markets are beginning to discount the disruption of the events in Crimea as its transition from Ukraine to Russia continues, seemingly, with limited disruption to the population of Crimea. The longer this continues, the smaller the chances of the situation escalating.
One potential issue is the reactionary sanctions between the US, the EU and Russia. The ultimate sanction for Russia to impose could be a reduction to the gas or oil it sends to the EU. Clearly, if this were to happen, Brent crude could see a sizeable response.
The current price of the commodity is sitting some distance below the 50-, 100- and 200-day moving averages, and also at the lower-end of the range of the relative strength index. Even with its impressive performance today, it is unlikely that the oil will fail to close lower for the fourth week in a row.
As long as Brent crude can keep closing above the $106 level, then a gradual rise back up to $112 could be achieved. The last six months have seen it trade between the $106-$112 level.