- US crude oil prices tumble 1.20% as the first Omicron-related death sparks fears over the new variant.
- Crude oil demand could decline if Ómicron exacerbates the previous variations.
- WTI Technical Outlook: Has a bullish bias, but the 200 DMA is at risk.
The US crude oil benchmark Western Texas Intermediate (WTI) is sloping lower during the New York session, trading at $ 70.96 at the time of writing. Since the morning of Europe, the market mood has been in risk aversion mode. The surge in COVID-19 cases, linked to the Omicron variant, and the first death caused by the strain in the UK, kept investors nervous. Along with that, the impact on the mobility of people and the weight of the United Kingdom to impose stricter restrictions pushed oil prices down.
In the morning, the WTI peaked at around $ 72.80, then fell to $ 70.55 amid the impact of the Omicron variant and mobility restrictions that could lower oil demand. That, coupled with technical resistance levels with the 100 hourly simple moving average at $ 71.70 and the 50 hourly SMA at $ 71.36, put a cap on WTI prices.
In addition, the Organization of the Petroleum Exporting Countries and its allies (OPEC +) increased their prospects for oil consumption in the first quarter of 2022, to 1.1 million barrels per day, which is equivalent to annual growth in world consumption. in a “typical” year before the pandemic. , according to Bloomberg.
In its outlook for 2022, OPEC mentioned that the Omicron variant is expected to have a mild impact as the world gets used to dealing with the COVID-19 pandemic.
WTI Price Forecast: Technical Outlook
The WTI daily chart shows that oil had been consolidating since Tuesday of last week. The asset has a bullish bias, with the 200 DMA below price acting as a dynamic support area. However, downside risks remain unless the oil bulls regain the 100 DMA at $ 73.77.
To the upside, the first resistance level would be the psychological figure of $ 72.00. A break at this level would send US crude oil toward the 100 WFD, but it must exceed $ 73.00.
On the other hand, a break below the 200 DMA would expose the $ 70.00 figure. If the WTI bears break that level, the next demand area would be the September 1 low of $ 67.01, followed by the December 2 low of $ 62.34.