Jump to content

Crude Oil Prices Surge to 7-Year High on Tight Demand, Iraq Pipeline Blast


Recommended Posts


WTI crude oil prices extended higher to $87 bbl, a level not seen since October 2014. A key oil pipeline from Iraq to Turkey was hit by an explosion, adding pressure to an already tight market.


  • Crude oil prices surged to the highest level seen since 2014 amid tight market conditions
  • Iraq-Turkey pipeline blast boosted prices as investors mulled geopolitical risks
  • WTI is trending higher within an “Ascending Channel”, underscoring a upward trajectory
Crude Oil Prices Surge to 7-Year High on Tight Demand, Iraq Pipeline Blast

Crude oil prices extended higher during Wednesday’s APAC mid-day session, trading at the highest level seen since October 2014. WTI is heading towards $87 bbl, and Brent is trading at around $88.8 bbl. Oil prices have been well-supported by rising physical demand, with Asian importers paying higher premiums for spot cargoes. Earlier this week, Japan and China released upbeat macro data, underscoring resilience of the world’s second- and third-largest economies against the headwind of the Omicron variant. China and Japan are the world’s first and fifth largest oil importers respectively.

A key pipeline that transports oil from Iraq to Europe through Turkey’s Mediterranean port of Ceyhan was hit by a blast today. The pipeline carries nearly half a million barrels of oil per day, so its outage has had an outsized impact on prices. Although the shutdown appears likely to be short-lived after fires are brought under control, traders remain jittery about geopolitical tensions in the region and their impact on oil supply.

Market participants remain bullish on oil. Goldman Sachs forecasted $100 bbl for Brent in the third quarter due to strong demand and tight supply. OPEC also foresees robust growth in world oil demand in 2022, predicting the oil market would be “well-supported” throughout the year. If their forecasts are correct, rising energy and raw material prices may prompt the Fed and other central banks to raise interest rates faster and sooner to rein in inflation.

In the US, crude inventories have been falling for seven weeks in a row, underscoring strong demand for energy (chart below). Investors will eye the next release on Thursday for more clues.

WTI Crude Oil Price vs. DoE Weekly Change in Crude Inventory

Crude Oil Prices Surge to 7-Year High on Tight Demand, Iraq Pipeline Blast

Source: Bloomberg, DailyFX

Technically, WTI is trending higher within a “Ascending Channel as highlighted on the chart below. The upper and lower bound of the channel may be viewed as immediate resistance and support levels respectively. The trio of short-, medium- and longer-term SMA lines are about to form a “Golden Cross”, underscoring a upward trajectory. The MACD indicator is trending higher, suggesting that bullish momentum is still dominating.

WTI Crude Oil Price  Daily Chart

Crude Oil Prices Surge to 7-Year High on Tight Demand, Iraq Pipeline Blast


Written by Margaret Yang, Strategist for DailyFX.com. 19th Jan 2022.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 30/09/23 18:13
  • Posts

    • Sorry, I didn't get it... What's Dual investment? 
    • The crypto market appears to be showing signs of recovery, with significant improvements in the Sharpe Ratios of Bitcoin, BGB, and Ethereum, according to an article published on Friday.  The Sharpe Ratio, a measure used to understand the return of an investment compared to its risk, has seen a notable increase for both cryptocurrencies. Bitcoin's Sharpe Ratio has risen from -2.4 to 0.68, while Ethereum and BGB have also experienced a similar uptrend. This change signifies higher returns at lower risk, which is expected to attract more investors to the crypto market. In addition to the improved Sharpe Ratios, increased network activity and trading volume as shown on CEXs like Bitget, Binance, and a few DEXs are suggesting a healthier market state. The current trading prices of Bitcoin, reflect this overall positive market sentiment. As of Friday, Bitcoin was trading at $27,069.73, BGB at $0.454 and Ethereum at $1,677.89. These developments are significant as they indicate reduced risk in the crypto market. The increase in the Sharpe Ratios for Bitcoin, BGB, and Ethereum suggests that these cryptocurrencies are becoming less risky investments, which could potentially lead to an influx of new investors into the market.  Could this rise in Sharpe Ratios coupled with increased network activity and trading volume point towards a recovering and less risky crypto market?
    • Hi, That's great, thank you very much. Very helpful! Many thanks.
  • Create New...