- WTI continues to push higher and is now trading around $ 72.00, and has almost reversed 50% of Friday’s decline.
- Analysts saw last Friday’s fear of the Omicron variant prompted an overblown sell-off.
Oil prices continue to push higher, with WTI futures rising more than $ 4.0 on the day and again trading at 72.00%, meaning that nearly 50% of Friday’s sharp drop in Omicron variant concerns has now been reversed. . To overcome the 50% Fibonacci retracement of Friday’s dip, oil prices should remain at the $ 73.00 level, which might be a bit of a stretch given how far prices have come on the day. Beyond $ 73.00 to the upside, there is resistance around $ 75.00, while the 200-day moving average at $ 70.00 could offer decent support.
Oil prices rose on Monday’s reopening, with many market participants opining that last Friday’s drop was exaggerated and exacerbated by weak liquidity conditions at the time due to the Thanksgiving holiday in the US. The latest global developments in response to Omicron (international travel bans) justify a short-term drop in oil prices due to the expected lower demand for jet fuel. But analysts reasoned that not enough is yet known about the new variant (such as its resistance to vaccines, transmissibility, associated severity of disease) to project a significant long-term impact on global oil demand.
That seemed to be the opinion of Saudi Arabian and Russian energy / oil officials. The former’s energy minister was quoted on Monday as saying he was not concerned about the Omicron variant, while the Russian oil minister said he did not yet see the need for urgent action. The OPEC + Joint Technical Committee will meet on Wednesday, followed by OPEC + oil ministers (when production policy will be decided) on Thursday. Elsewhere this week, the US inventory numbers will be observed as usual on Tuesday and Wednesday, while talks between the JCPOA signatories (Iran, the EU nations and the US) they will restart discussions on a return to the 2015 nuclear deal. Strategists do not have much hope that an agreement will be reached that will allow Iranian oil exports to return to world markets.