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UK Oil - Surges to Three Month High Above $46 on Vaccine Hopes

   

 

UK Oil - Surges to Three Month High Above 46 Level on Vaccine Hopes
 
In the last week, UK Oil has surged higher from support at the key $43 level moving to its highest level in three months above $46. In the few days before the recent surge, it eased back to this level and enjoyed some support. In the two weeks prior, UK Oil surged from its lowest level in five months below $36.50 back up to the key $43 level which has again provided stiff resistance before it was able to break through to above $45 before falling back sharply to $43. Leading up to the strong surge, UK Oil fell away strongly from the key level of $43 which now continues to play a role and in recent time, has provided resistance, and more recently, support. For the last two months or so, this level has been providing stiff resistance and constant downward pressure on prices. During this time, UK Oil has made repeated attempts to break through the long time key level of $43 so it is quite significant that it has now broken through this level and received support.

It has spent the best part of the last two months trading below this level after falling sharply through it from a six month high above $46. UK Oil reached the six month high after very slowly but steadily moving higher in a period of very low volatility, although the volatility has return in the last month. After it broke through $43, it was able to enjoy some strong support from this level, however this has now been strongly broken through and is providing some resistance as expected.

In early June UK Oil made two solid runs towards a then three month high and met stiff resistance at $43 on both occasions. Throughout May, UK Oil slowly but surely moved higher to that three month high, before falling sharply, and then making repeated attempts to push passed the current resistance around $43. Its recent surge higher is a vastly different picture to mid-April, as UK Oil sank to its lowest level in many years below $20, and currently UK Oil is close to closing the significant gap down in early March, by returning to above $45.

In early May, UK Oil settled right around the key $30 level after rallying well off the multi-year lows below $16, and it also consolidated well several weeks ago around $35. After a significant gap down from $45 to $35 in early March, it initially received solid support from another key level of $25 which had supported it well for several weeks, which was so desperately needed, so it was telling when its largest fall was breaking through the $25 level mid-April. Through most of March and April, UK Oil did well to consolidate above $25 after such significant falls in early March. During the first half of March, UK Oil fell from a previous key level at $58 down to the multi-year lows and consolidated well stopping the rot, before the break lower in the second half of April.

Risk appetite has been boosted in financial markets around the world over the last few weeks, as there has been increasing talk about COVID-19 vaccine hopes. There is also expectations that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, might extend a deal to restrain output. The latest vaccine testing report was from AstraZeneca who has stated that interim analysis showed its vaccine has an average effectiveness of 70% with one dosing regimen showing effectiveness of 90%. This follows on from other reports of late-stage trial data from Moderna and Pfizer-BioNTech that their own vaccines were around 95% effective. The vaccination process is set to commence before the end of this year, with European and US officials pushing to approve them, now that there are three vaccines showing 90+% effectiveness. Pfizer said it was set to apply for emergency U.S. authorization after results from its vaccine trial showed a 95% success rate with two months of safety data. With this vaccine potentially not far away, and with others in the pipeline, financial markets appear to be clinging to the hope of vaccine success and roll-out of a COVID-19 vaccine.

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.

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