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Crude oil price rallies with Omicron variant optimism

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Analysis by Golden FX Link Capital business manager Long Samnang

Crude oil price rallies with Omicron variant optimism

Crude oil saw a green candlestick return in the first week of December after suffering the highest November drop of 2021.

WTI crude had an opening price of $69.77 per barrel on Tuesday, building from Monday’s opening of $67.02 per barrel.

The slight rise occurred amid a broad market rally driven by “optimism the Omicron virus variant may not be as bad as anticipated, easing concern over the energy demand outlook,” Bloomberg reported.

“Oil is clawing back losses after sliding over the past six weeks in part due to the emergence of the new coronavirus variant and signs that key consumers would tap emergency crude stockpiles to tame rising prices,” the New York-based media company said.

Investing.com’s Barani Krishnan reported on Monday: “While there was heavy buying among traders sensing a bargain to last week’s lows, some analysts cautioned that the upward momentum could reverse at any time once new Omicron warnings creep back into the market.”

Krishnan quoted Craig Erlam, analyst at online trading platform OANDA as saying: “Ultimately, the most bullish thing for prices is that Omicron is reportedly less severe.

“If the good news doesn’t follow, OPEC+ will pare back output and support prices that way. The question is how much the lows will be tested in the interim, if at all. Producers’ resolve has been tested before on many occasions.”

Krishnan said “oil producers could return to production cuts if they could not stop the six-week slump in crude prices”.

He quoted OPEC secretary-general Mohammad Barkindo as saying on Saturday: “We will continue to do what we know best to ensure we attain stability in the oil market on a sustainable basis.”

Based on these fundamentals, for this week’s trading recommendation, investors can place a selling order for crude oil at $72 per barrel, setting a stop-loss function at $75 per barrel and a take-profit at $65. Alternatively they could wait, buying when crude drops to $62 per barrel.

Content image - Phnom Penh Post

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