Oil prices fell around 2.0% on Thursday as a rising number of new Covid infections in China sparked demand concerns. Several countries, including the US and Italy, are already imposing testing for Chinese passengers, while Beijing reverses the “Zero-Covid” policy. At the same time the Chinese Center for Disease Control and Prevention (CDC) warned of Covid spreading throughout the holiday season, however also mentioned that the virus outbreaks have peaked in Beijing, Tianjin and Chengdu. Nevertheless, uncertainty regarding the pandemic situation in China dimmed hopes of a recovery in fuel demand for the world's largest crude oil importer, which puts pressure on prices. Also reports of new Russian missile strikes in several Ukrainian cities, coupled with Kremlin’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories weighed on market sentiment.
OIL.WTI pulled back from recent highs at $81.00 and broke below local support at $77.80 during today’s session. Nevertheless downward pressure eases as buyers fail to reach major support at $76.20, which coincides with 78.6% Fibonacci retracement of the upward wave launched in December 2021 and 50 SMA (green line). As long as price sits above, upward move may resume. On the other hand, if sellers manage to push the price below aforementioned support, downward move may deepen towards lows around $73.60. Source: xStation5
