Thursday, February 2, 2023

West Texas oil bogged down by Covid problems in China

Oil prices fell nearly 2.0% on Thursday as demand worries rose due to a rising number of new COVID-19 infections in China. Several countries, including the US and Italy, are already testing for Chinese travelers, while Beijing backs a “Covid Zero” policy. At the same time, the Chinese Centers for Disease Control and Prevention (CDC) warned about the spread of COVID during the Christmas season, however, noting that virus outbreaks peaked in Beijing, Tianjin and Chengdu.

However, uncertainty over the pandemic situation in China has dampened hopes of a recovery in fuel demand from the world’s biggest crude importer, putting pressure on prices. The Kremlin’s rejection of peace with Ukraine as well as reports of new Russian missile attacks on several Ukrainian cities until it accepts a treaty allowing additional territories weighed on market sentiment.

OIL.WTI It retreated from the recent high at $81.00 and broke below the local support at $77.80 during today’s session. However, the downside pressure subsided as the buyers failed to reach the key support at $76.20, which coincides with the 78.6% Fib retracement level of the bullish wave that started in December 2021 and the 50 SMA (green line) . As long as the price holds above, the bullish activity may resume. On the other hand, if the sellers manage to push the price below the above support, a lower move could extend deeper towards the $73.60 low. Source: xStation5

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