1. Supply and demand. When demand exceeds supply, oil prices will rise.
2. US dollar index. When the dollar index weakens, funds will flow from the dollar market into the crude oil market, thus stimulating the rise of crude oil.
3. The influence of war.
4. Policy implications.
5. US dollar index. When the dollar index weakens, funds will flow from the dollar market into the crude oil market.
After the outbreak of the Russian-Ukrainian conflict, the fluctuation of international oil prices suddenly soared. In the past two weeks, the international oil price has reached about $40/barrel in both directions.
Under such violent fluctuations, many traders find it more and more difficult to trade, so they reduce their positions and wait and see, which makes the liquidity of the crude oil futures market plummet. At the same time, the increase of volatility has also led to the increase of margin requirements of brokers and clearing institutions, which has dried up liquidity and many traders have to seek help from private equity institutions and central banks. Some analysts even worry that the next liquidity crisis may occur in the commodity market.
As of March 17, CBOE crude oil volatility index has risen by 80% so far this year. Since the beginning of March, the fluctuation of oil price has been more severe than that at the beginning of the COVID-19 outbreak in 2020 and the financial crisis in 2008. Before the escalation of the conflict between Russia and Ukraine, Brent crude oil futures were around $97, but on March 7, the oil distribution once rose to the peak level of1$39/barrel, then fell back to the level before the escalation of the conflict last week, and finally rose by more than 9% on Thursday and Friday to close at1$07.93/barrel.
Bill Farren Price, director of Enverus, an energy consulting company, said, "Oil price fluctuations are closely related to the game between large crude oil producers. Supply risk is one thing, and questioning demand is another. The next important indicator will be Europe's attitude towards Russian energy sanctions and Iranian nuclear negotiations. "
Analysts generally expect that the oil market will continue to fluctuate due to the Russian-Ukrainian conflict, the Iranian nuclear agreement, the impact of inflation and interest rate hikes on demand, and the uncertainty of developments related to the COVID-19 epidemic.