🛢 Covid-19 restrictions in China and worrying economic data put oil prices under pressure.
Oil prices tumbled roughly 4% on Monday, extending last week’s declines. Investors’ attention has been shifted on China recently as the second-largest economy imposed new restrictions to curb the spread of the Delta variant. Over the weekend China’s authorities tightened travel restrictions to Beijing, banning travellers from areas with recent cases and suspended plane, train and long-haul bus services from such areas. All in all, any new restrictions in China weaken the global demand outlook for oil.
From the data front, China’s inflation figures for July turned out to be higher-than-expected. The CPI print came in at 1.0% YoY (vs exp. 0.8%) while the PPI climbed to 9.0% YoY (vs exp. 8.8%) - this might raise concerns as elevated prices could hamper the economic growth. Also, China’s trade data for July disappointed as well - both exports and imports rose at slower pace than expected, which is another sign that could make markets anxious.
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OIL is plunging roughly 4% today and the price is currently testing both the lower limit of the Overbalance structure and the upward trend line (W1 interval). Oil prices have already fallen more than 12% from the early-July peak. The $60 a barrel mark, which coincides with the 78.6% Fibonacci retracement, may serve as the next critical support if declines continue. Source: xStation5
