WTI crude is down to fresh lows since 24 May
Oil is finding itself in a rough spot technically as it continues its losing streak from last week to break the double-bottom support seen closer to $65 yesterday.
Price is down by another 1.6% currently in fall to $64.40 as the downside looks to intensify – at least from a technical perspective.
I’ve been an oil bull for quite a period of time already but my conviction has been watered down quite significantly over the past few weeks:
The shift in the technical picture adds reason for a further dip potentially as demand outlook as been dampened by delta variant concerns.
I don’t see anything changing on the supply front so it is looking like things are going to shape up to be more of a risk trade i.e. trade on the global economic outlook and virus situation over the next few weeks at least.
As things stand, I wouldn’t rule out a further drop to the May lows @ $61.58-70 next and a likely test of the 200-day moving average (blue line).
The structural view is that oil prices should pull higher eventually in the long-run i.e. 12 months from now, but it isn’t wise to be fighting the short-term narrative at the moment.