WTI Crude Continues Impressive Bounce

Oil prices have continued to press higher, with front-month WTI crude futures now up more than USD 4.0 on the day and back in the USD 72.00s, nearly 50% of Friday’s steep decline over news on Omicron variant concerns has now been unwound.

To get above the 50% Fibonacci retracement of Friday’s slump, oil prices would need to remain the USD 73.00 level, which might be a bit of a stretch given how far prices have already come on the day.

Beyond USD 73.00 to the upside, there is resistance around USD 75.00, while the 200-day moving average at USD 70.00 might offer decent support.

Oil prices surged at the Monday reopen of trade, with many market participants of the view that last Friday’s drop was overdone and exacerbated by thin liquidity conditions at the time due to the Thanksgiving holidays in the US.

The latest global developments in response to Omicron, including international travel bans, justify a short-term drop in oil prices owing to expected lower jet fuel demand.