Oil prices fell overnight as the International Energy Agency did an about-face from last month and lowered its global consumption forecasts. The main driver, of course, has been the lightning-fast spread of the delta-variant virus across the globe.
Brent crude fell by 0.60% to $71.15 a barrel, and WTI fell by 0.62% to $68.80. Asia has continued pushing oil lower, spurred by the small but persistent spread of Covid-19 cases across China, with fears of mass lockdowns. Also, the partial closure of its two busiest ports as part of virus containment measures. Brent crude has fallen 0.50% to $70.80, WTI by 0.52% to $68.55 a barrel.
With the respective relative strength indexes (RSIs) back into neutral territory from oversold, the technical picture now swings back to negative for both contracts. Notably, Brent crude and WTI have failed ahead of resistance at $72.00 and $70.00 a barrel, respectively. Brent crude is in danger of breaking nearby support at $70.70 a barrel, signalling further losses to its 100-DMA at $70.15 initially and possibly $69.00 a barrel. Similarly, WTI is in danger of giving up nearby support at $68.50 a barrel and testing its 100-DMA at $67.60, potentially extending to $66.60 a barrel.
Continued US Dollar strength won’t help oil’s cause either, but the sudden about-face by the IEA has shaken nerves and capped the oil rally, bringing home the reality of the impact of the delta-variant. China concerns will continue to cap oil prices until New York arrives, and if the situation there worsens over the weekend, or Monday’s data is soft, oil could well be in for a torrid start next week.
