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Oil looks to hold bounce of July lows for now

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WTI crude up 0.8% to near $67 on the day

WTI

Oil suffered a beating yesterday in a fall to test its July lows but the support region there held and we may see a short-term double-bottom pattern form in the commodity.

The 100-day moving average (green line) is still seen @ $67.13, so keep below that and any bullish bias remains limited as well – at least for the time being.

While buyers may have staved off a fresh leg lower in oil prices, any material rebound or upside to retest the early July highs may be tough to come by.

The market is showing a keen focus on the spread of the delta variant in China in particular and until there is some good news there, headlines are to suggest a higher likelihood of flagging demand conditions (or at least a temporary hit).

As for today, SCMP reports that China’s local COVID-19 outbreak has hit its highest daily cases total since the current wave began on 20 July. While oil may be bouncing a little based on a technical reprieve, the fundamental developments aren’t too positive lately.

And until things change on the latter front, dip buys – still the preferred stance – will face tougher resistance as compared to the more straightforward case in earlier months.

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