EU plans to embargo on Russian oil go bankrupt? Crude oil continues to be subject to 111, wary of downside risks

WTI crude oil prices fluctuated sharply this week, with the overall scramble
around the 111.
0 level.
On Thursday (May 19), WTI crude oil once fell to an intraday low of $104.
99, refreshing a one-week low
since May 12.
Surprisingly, WTI crude has since rebounded sharply by more than 7% to return above
the $112.
0 level.
However, on Friday (May 20), oil prices opened sharply below another 2.
29% and are currently holding
around $109.
0.

There is no doubt that the sharp fluctuation in oil prices highlights the current divergence in the market, and supply-side concerns still limit further oil prices, but the influence of the EU embargo on Russian oil is further declining, which may mean that WTI crude oil bulls have lost the battle for the key level of 111.
0
.

It is worth noting that although the EU has been calling on member states to impose oil sanctions on Russia, Russian Deputy Prime Minister Alexander Novak said on Thursday (May 19) that about half of Gazprom's 54 gas buyers have opened accounts with Gazprom to pay for supplies in rubles
.

In fact, the "bankruptcy" of the EU's sanctions plan against Russia has long been signed, and the discussion on the Russian oil embargo at the meeting of EU foreign ministers in Brussels on Monday (May 16) has not made clear progress
.
Hungary, a member of the European Union, maintains a "no" attitude
towards the oil embargo.
Hungary has previously said it wants to receive an investment of 15 billion to 18 billion euros before it can abandon Russian oil
.

On the other hand, as inflation rises further in major Western countries, major central banks are accelerating policy tightening to suppress demand while also hoping to moderate the current oil price rally
.
The UK consumer price index (CPI) for April released on Wednesday (May 18) reached 9%, a sharp increase from 7% in March and the fastest growth rate since 1982; Eurozone harmonized CPI rose 7.
5% year-on-year in April, the highest level
since statistical records began in 1997.

Europe and the United States are considering adjusting the pricing ceiling and taxes on Russian stones to replace the embargo

The U.
S.
will discuss pricing caps and taxes on Russian oil with G7 leaders as an alternative to the embargo, and a tax on Russian oil will keep the market supplied, limiting price spikes and reducing Russian revenues
, according to reports.

In fact, 40% of the EU's natural gas and 27% of its oil imports come from Russia, highlighting the difficulty of EU energy sanctions, according to the Brueger Institute for Economic Research in Belgium, the EU currently imports about $450 million worth of oil, $400 million of natural gas and $25 million of coal
per day from Russia.
Jeff Currie, head of global commodity research at Goldman Sachs, warned that the EU coal embargo on Russia is relatively easy, the gas embargo is almost impossible, and oil is somewhere in between, and it will be very difficult
to implement.

The economic outlook report released by the European Commission on the 16th predicts that the EU economy will grow by 2.
7% and 2.
3% this year and next, respectively, lower than the 4% and 2.
8%
predicted in the February outlook report.
It is foreseeable that once the EU sanctions Russian oil, its own economy will also suffer a heavy blow
.
Therefore, the author expects that under a series of resistances, the EU may delay the progress of the embargo on Russian oil, which may mean that there is some room
for oil prices to pull back in the future.

In this context, the focus of the crude oil market may return to the demand side, and in the short term, summer travel demand in the northern hemisphere will bring gasoline, diesel and jet fuel in the coming months, and the resumption of work and production in Shanghai, the world's second largest economy, is expected to provide support
on the demand side.

However, in the medium term, investors need to be wary that the probability of a global economic recovery, especially the United States, falling into recession next year has increased sharply amid the firm determination of major central banks to tighten policy, and if this concern is further fermented, it is expected to eventually weigh on
the oil demand side.

WTI crude oil trend analysis: bears have the advantage, 111.
0 level gains and losses

The 4-hour chart shows that the key level of WTI crude oil at 111.
0 has gained and lost, and the daily chart has formed a "top-split" bearish signal, which increases the possibility
of the end of the rally in oil prices since April 11.
WTI crude oil is expected to test the 104.
0 level support in the future, and if it effectively falls below, the market will further test the support
around 95.
0 in the future.