Oil is down 2% to near $67 in European morning trade
While WTI crude seemingly held at the July low in trading last week, the latest bounce never really got going as it is slowly fizzling with the market leaning more towards being risk averse to start the new week.
Delta variant concerns are posing a fresh risk to global oil demand outlook and that is weighing on prices so far this month. The virus situation in China is arguably the most prominent influence when viewing the headlines but the spread of the delta variant in other parts of the globe is also a worrying issue nonetheless.
Essentially, a bet on the oil market now is a bet that the progress of vaccinations will keep global economies open and recovering through to next year.
Can one really say for certain that is going to be the case? I doubt that.
But the technical picture for oil is at least going to get more interesting in the sessions to follow. The supposed double-bottom near $65 is going to be a key technical support to watch out for as price now creeps below the 100-day moving average (green line).
A break below that support region will likely set off stops and accelerate any drop in oil, especially with the fundamentals starting to be challenged i.e. uncertain demand outlook and softer risk sentiment across the market.
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