The oil price was hit by the risk-off seen on markets in the last 36 hours. Growing fears about the new UK variant of the coronavirus generated a sell-off on both European stocks and oil. For WTI we have a quite significant support zone between $46.50 and $47 per barrel, which triggered a quick rebound yesterday afternoon, before being tested again this morning. So far, yesterday’s low has not been challenged and this could be seen as a signal of the price attempting to stabilize, even if oil is still in red again this morning.
The next few trading sessions will be crucial in understanding if the bullish trend of the last six weeks is just taking a break or if the recent declines are the start of a major pause. For the time being, despite the 5% decline from the peak of last week, we are still in a long-term positive scenario. However, this could change if investors continue to worsen their outlook on oil demand for 2021 due to COVID-19.
