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WTI - Is the rally over?

ByAntonio Ferlito
Published 21/12/2020, 15:47
CL
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Oil prices fell sharply in the first session of the week, retracing from the highs of the last nine months reached on Friday.

The largest daily decline since June is due to concerns raised by the new strain of coronavirus which forced Britain to implement new lockdown measures.

Israel and Canada have closed their borders with the UK. Hong Kong is expected to ban all flights arriving from the UK after midnight. After Belgium and Holland, Italy too has decided to stop flights from Great Britain until January 6.

At the moment, science cannot say whether the vaccines currently being administered or being studied are capable of counteracting the new strain. WHO is closely monitoring the situation.

The news completely obscured the positive tone of the agreement reached over the weekend between the leaders of the United States Congress for a 900 billion dollars aid package.

The bearish scenario is also supported by the fact that Baker Hughes reported an increase in the number of oil and gas drilling rigs in the United States.

Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Saturday that world oil demand is still 6-7 million barrels per day (bpd) below pre-crisis levels.
Technical Analysis.

Graphically, the active correction started after the market completed the pull-back of the support from February. In our previous article we had suggested a short-term target at USD 48.50.

Overall, the outlook remains bullish after the break-out of the consolidation area around USD 46.50. Operationally, we can try to take advantage of the current retracement towards the previous resistances at USD 46.5 and 43.8 to buy on the weakness.

Change of scenario in case of a descent below these 43.50.
WTI 1W

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