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WTI falls to two-day lows below $ 78

  • WTI has started the week moderately, currently trading around 50 cents below $ 78.80.
  • Oil markets will be on the lookout for issues such as US inflation, supply disruptions and the Omicron outbreaks in China.

Oil operates lower at the start of the week, with prior month’s WTI futures currently down 50 cents on the session and touching two-day lows at 78.50, while continuing the gradual pullback from last week’s highs above from $ 80.00. The price action so far this Monday has been quite boring, with the WTI so far contained within a range of $ 78.00 – $ 79.50. The news flow has been quite light, giving market participants time to reflect on some of the ongoing macroeconomic issues.

In that vein, the macro focus will be on this week’s U.S. consumer price inflation data to be released on Wednesday, which could affect market expectations about whether or not the Fed will raise interest rates in March. . The Fed’s tightening issue has been the main driver of equity, bond and currency markets in recent days, but crude oil has also focused on supply dynamics. Oil prices were supported last week by news of a significant short-term decline in production in Libya and by protests in Kazakhstan disrupting production there. While there are no signs of recovery in production in the former yet, Kazakhstan’s president said the situation is now back under control, alleviating fears that the country’s 1.16 million barrels-per-day output will face interruptions.

Market commentators have also pointed out that the China lockdowns are likely to be a major issue in crude oil markets going forward. Several Chinese cities are reporting cases of local transmission of the Omicron variant, the spread of which in China is seen as key proof of the country’s Covid-19 zero approach. After discovering the Omicron infections, the northern city of Tianjin has tightened exit controls, while the centrally located Henan Province has also reported cases. Analysts at OCBC Bank said authorities are likely to maintain their zero Covid strategy ahead of the Beijing Winter Olympics in February and the economy is likely to see “more short-term disruptions due to more frequent shutdowns.”

Technical levels

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