UK Oil Volatile Amidst War

Published On: 28 March 2022, 1:01PM | Jeraldine Tan, Senior Dealer

UK Oil had been in an uptrend with recovering demand and inflationary pressure. However on the onset of the Russian-Ukranian war, the markets started its climb, starting to factor in the possible effects of war.

As soon as Russia invaded Ukraine, market shot up to a high of 134.60 on the back of various sanctions on Russian oil (however, to note Russia is a key supplier of oil and gas). As of now, market is already finding it difficult to pay Russian entities, causing Russian oil to not have a home.

Market is starting to reflect a tight market again but with strong oil prices, that would drive up prices of goods and services (oil and gas are key inputs). So there will eventually be some way to solve this;
  1. easing of sanctions on Russia to exempt oil related transactions
  2. hearing US wants to release their crude reserves
  3. other producers will produce more to capture this price

These few solvers above will drive prices lower. As of now, bulls can enter to ride the trend hoping to test the previous high again. Bears can enter with a view that solvers will come in and market will return to the most recent low.

But market is now in the middle of the recent high-low range so these may not be good risk reward trades. Instead, bulls may enter half their risk now and scale in lower as market re-tests the low. Bears can enter half their risk now and scale in at the most recent high should there be clearer news on solvers.

This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks. The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated. The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange. You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low. Clients are advised to understand the nature and risks involved in margin trading. You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualifies financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement. You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at before trading in this product. Any CFD offered is not approved or endorsed by the issuer or originator of the underlying securities and the issuer or originator is not privy to the CFD contract. This advertisement has not been reviewed by the Monetary Authority of Singapore.