By Barani Krishnan

Investing.com — “In the midst of chaos, there is opportunity,” said Sun Tzu, the ancient Chinese master strategist who authored The Art of War.

And in the midst of Friday’s chaos in figuring out Vladmir Putin’s next move, oil bulls saw another opportunity to drive crude prices higher, this time past the key $95-a-barrel resistance which presumably leaves them just one crisis short of the much-awaited $100 prize.

Friday’s drama started just before 1:30 PM New York (6:30 PM London) when wire services flashed broadcaster PBS’ bulletin that the United States believed Putin had made up his mind to invade Ukraine. According to reports, Putin had made this known to the Ukrainian leader. An invasion was expected by next week, two Biden administration officials told PBS – echoing Secretary of State Tony Blinken’s thoughts –  the reports added.

Then all hell broke loose. In just 15 minutes, crude oil shot up from $92 at a session high $94.66, and Brent rose from $93 to $95.65. Nearly every metals and energy market saw a rise, with gold reaching a three month high of $1,862. 

Wall Street’s indexes got trounced again, with the and both down almost 3% at one point (the S&P rebounded a little by the close to finish 2% down). For stocks, the deja vu of January’s lows beckons after a two-week rally this month.

With markets remaining on edge, White House National Security Adviser Jake Sullivan told a news conference that afternoon that Russia could indeed invade Ukraine soon while the world’s attention is glued on the Olympics. He stated that Moscow had all the necessary resources to conduct a major military offensive on Kiev. This will most likely involve aerial attacks. He reiterated that the United States would respond strongly if Putin did as planned.

Sullivan, however, said something else that probably superseded the rest of his spiel at the news conference, and that was: “We do not claim that Putin has made a final decision”. Many in the market found this important as it indicated that the White House might have made more out of the situation.

As Ed Moya of online trading platform OANDA put it: “A period of calm was somewhat expected regarding the Ukraine situation, but that does not seem to be the case anymore.” 

U.S. crude lost a lot of the gains it made from yesterday’s peak, and settled slightly lower after seven weeks. (In after-hours trading, however, the intraday peak was closer). Brent also declined, though not as much. It finished the week up by more than 1 percent for its eighth straight week.

Oil was also boosted Friday by the International Energy Agency’s warning that global oil supplies might be short of demand.

The Paris-based IEA, in its monthly report, lifted its forecast for this year’s global oil demand by 800,000 barrels a day to 3.2 million barrels.

The IEA estimated that there would be a shortage of 1.2 billion barrels between the amount of oil the Organization of the Petroleum Exporting Countries (or OPEC+) was supposed to have pumped and actual delivery to the market. 

“The oil market is incredibly tight,” Toril Bosoni, head of the IEA’s markets and industry division, said in a Bloomberg television interview after the release of the report. “Prices continue to surge and are now reaching levels that are uncomfortable for consumers across the world.”

Oil prices lost 3% in the week ending Thursday, prior to the Russia-Ukraine controversy and the IEA warning. This was due to concerns that Iranian oil supplies might legitimately return onto the market via a nuclear agreement and that the Federal Reserve could increase rates by as high as 0.5% per month in the coming months to reduce runaway U.S. Inflation.

So back to Sun Tzu’s quote on chaos and opportunity, both shorts and longs had their share of oil’s spoils at different stages of the week though the market once again tipped towards the bulls by Friday’s close.

Oil Prices & Technical Outlook

New York-traded oil settled at $93.10 per barrel, up 3.6% or $3.22 WTI reached an intraday peak of $94.65, just a day earlier. WTI fell 0.3% or 37 cents for the week, its first drop in seven weeks.

Brent, the international benchmark for oil traded in London, reached a session peak of $95.65 and settled at $94.44, up 2.98 (or 3.3%). Brent gained 1.3% in the past week. This was its eighth consecutive week of gains.

According to Sunil Kumar Dixit (chief technical strategist, skcharting.com), both benchmarks had become overbought chart-wise after 8 consecutive weeks of gains.

“It’s extremely overbought actually,” said Dixit. “In WTI’s case, this week’s rise from the lows of $88.40 to the highs of $94.65 has left it with a weekly stochastic reading of 94/9 and weekly RSI reading 71.”

“These are the prime overbought conditions that shout out aloud for an imminent correction to at least $88 and $77 over short to mid term. We will get it, but how? Probably not, as long as the Ukraine crisis keeps bubbling.” 

Dixit said that WTI could consolidate above $90 or $92 to increase its position for $98. WTI may also be able to cross the $100 threshold with $107 and $101 targets.

Gold Price & Market Activity

It was only three months since gold reached $1,860. The previous time that it rose more than 2% per day was six years ago.

But that’s what happened in Friday’s session amid U.S.-fed fears of an imminent Russia-Ukraine war and that, too, after the close of the Comex session that unofficially put the market up 3% for the week.

Gold’s most active futures contract on New York’s Comex, , settled up $4.70, or 0.3%, at $1,842.10 an ounce.

It was just before the reports that Russia wanted to invade Ukraine.

The April gold price soared almost immediately following the settlement. It added $25 more to $1,867.25 and is now at its official session peak for Monday.

Unlike oil prices, gold barely wavered from its highs even as White House National Security Adviser Jake Sullivan walked back some of the assertion that Russia would definitely attack Ukraine by next week (talk about gold’s long-absconded safe-haven quality making a forceful return). 

For longs in the market, gold’s ability to sustain above the key $1,800 has been a boon despite repeated fears of excessive U.S. rate hikes this year to deal with soaring inflation.

Now, we have to ask the question: Can bullion go up to $1,900 by next week and then?

Geopolitics might have the answer to that, now gold’s safe-haven role is back in play.

Technical Outlook: Gold

Dixit from skcharting.com stated that gold seemed quite certain to hit $1,900 due to its current momentum.

“Gold has witnessed one of the best weekly gains amidst sabotage attempts at institutional levels throughout the year and back,” said Dixit, referring to the past maneuvers of so-called bullion banks to keep the yellow metal depressed. 

With gold’s rise above $1,808 support it had broken multiple resistance levels. It closed the week at $1.865 for an impressive $41 gain.

Dixit indicated that the momentum was supported by weekly Stochastics of 50/50 and RSI 57.

“Since $1,860 marked the significant 23.6% Fibonacci level of $1,678 to $1,916 major retracement, prices may witness a continued charge to $1,900-$1,916 if gold can sustain above the $1,843-$1,825 support zone in the event of any correction,” he added.

Disclaimer:Barani Krishnan doesn’t hold any positions in securities and commodities that he discusses.