Energy crisis: surge in oil causes gasoline panic at the pump
The continued surge in oil has combined with supply issues caused by the shortage of truck drivers to fuel the gasoline spikes and stoke fears of a winter energy crisis. Here’s the latest, along with a technical preview from Brent.
Concerns over the energy crisis are mounting in the UK, with rising oil prices hitting costs at the pump and causing motorists to panic to buy fuel.
On September 24, Brent prices hit a two-month high, around $ 77 a barrel, and the effects are being felt at gas stations, with reports of traffic jams as panic buying takes hold. above and the desperation of motorists to fill their tanks increases.
The news follows Green and Avro joining the list of small UK energy operators to go bankrupt as wholesale natural gas prices soar.
Amid the rush, the UK government claimed there was no shortage of fuel, but service stations noted a lack of unleaded and diesel grades.
To add to the petrol shortage issues plaguing the UK, some service stations have been forced to close due to the additional issue of the nation’s shortage of heavy truck drivers affecting supplies to forecourt.
Energy crisis: the impact
The latest developments in the energy crisis will impact consumers and businesses alike already concerned with inflationary pressures caused by a headwind – from supply chain disruptions in the trendy food sectors to levels of. government borrowing during the coronavirus outbreak.
Indeed, increases in energy prices are expected to push inflation above 4% this winter, according to the Bank of England. Despite the developments, the BOE’s monetary policy committee voted to keep interest rates at 0.1%, which represents a continuation of its all-time low.
Earlier this week, Fiona Cincotta explored how to negotiate the energy crisis. Outside the UK, larger increases in electricity prices in Europe have been seen as a result of a shortage of natural gas and growing demand. Renewable energies are struggling to fill part of the void with a lack of wind power production hitting the wind there.
In the United States, crude oil inventories have declined amid continued demand recovery.
Technical outlook for Brent crude amid the energy crisis
On a technical level, here’s a look at how Brent correlated to GBP / CAD over a 240-minute period.
Brent crude oil
Brent oil hit a low of 18.89 on April 23, 2020 and the price has not fallen since. Oil had advanced in an orderly channel and hit a high of 77.64 on July 6, just ahead of the 61.8% Fibonacci retracement from October 2014 highs to April 23 lows.
Brent then retreated in a corrective fashion and hovered around a downtrend line from those same highs in 2014 (green line) and the 50-day moving average. Black gold held the 200-day moving average in August above 64.64 and continued its upward movement. It is currently based on July 6 highs at near 77.64.
The resistance above is at the previously mentioned 61.8% long-term Fibonacci retracement level at 78.57, then the much higher October 2018 highs at 86.61! If the price fails, the first support is at the 50 day moving average near 71.88, then the long term descending trendline (green) near 70.65. Below is the 200-day moving average at 66.40.
Source: TradingView, StoneX
GBP / CAD
Because Canada is an oil exporting country, the value of the Canadian dollar is tied to the value of oil. Over a period of 240 minutes, the current correlation coefficient between UKOIL and GBP / CAD is -0.81. Anything greater than +0.80 or less than -0.81 is considered a strong correlation. Therefore, when the price of Brent crude rises, the GBP / CAD tends to fall.
GBP / CAD has hit higher lows since early May, but recently retreated and tested the May 7 ascending trendline near 1.7287. There is also a support zone between 1.7185 and 1.7260.
Over this shorter time frame, if Brent Oil can push higher above resistance, given the current correlation coefficient, GBP / CAD should come down and test those levels. If Brent fails to break through resistance and pulls back, GBP / CAD could move higher. Horizontal resistance is at 1.7434 and then the September 20 highs at 1.7603.