Oil up over 1% on the day close to $69.00
Price action in oil this week leaves a lot to be desired as we continue to observe more of a push and pull more than anything else. So, what gives for oil at the moment?
Quite frankly, nothing has changed since the start of the month and I would argue that the latest moves pretty much reaffirm my earlier views last week:
Looking at the daily chart though, we can see that oil gains continue to see some resistance closer to $70 for the time being and that is perhaps part of the story here.
The 100-day moving average (purple line) is also a key technical support level to watch adding to the near-term level highlighted above, so that provides the key region that buyers must keep above in order to sustain the latest upside leg.
Otherwise, oil may yet be caught in a bit of a tug of war between the May and August lows around $61.70 to the $70 mark until the fundamental picture sorts itself out.
On the balance of things, oil market fundamentals may support a push higher. As mentioned back in late August below (the view has not changed):
The broader outlook for oil going into next year remains relatively unchanged as the market is likely to remain tight and that is supportive of higher prices in general.
Overall sentiment on the pandemic and the delta variant is still likely to keep oil gains limited in the short-term but if the market starts to sense a convincing turn in the battle against the virus, there’s room for oil to rally much further from these levels.
However, there are short-term risks to be wary about with the global recovery slowing and the pandemic still keeping the global outlook rather tense for the time being.