GOLDWELL：Daily Market Recap – USOIL Trading at 3-month lows

Oil

prices have been hit by the “risk-off” mode that has gripped the

markets, as concerns about the spread of Covid continuing to mount and

the Fed hinting that tapering may take place this year. Prices finished

lower for the fifth day in a row yesterday and look set to record

another decline today.

From

the Fed angle, several factors have emerged in recent weeks to explain

the price decline that accelerated yesterday with the release of the Fed

minutes:

- Bearish macroeconomic concerns continue to mount

- The spread of variant delta and new containment measures (particularly in China)

- Weaker than expected air passenger numbers this summer

- Concerns about inflation and rising interest rates

- Pressure from the U.S. on OPEC+ to restore supply to the market

- Signs that U.S. shale production is beginning to increase

It

is still early to tell whether these factors will have a lasting impact

on prices and demand in particular, but their emergence is enough to

dampen price expectations in the short term with oil trading at a

3-month low on Thursday.

Ongoing

concerns over the recent surge in covid cases have prompted traders to

wonder whether a peak of global growth has been reached as countries

restart imposing lockdown restrictions.

Indeed,

the demand outlook has been particularly hurt by the sharp tightening

of sanitary restrictions in major Asian countries since the beginning of

the summer. Japan, Australia, and China have all progressively

tightened health restrictions since the beginning of the summer as the

number of infections increases at an ever-faster pace.

Meanwhile

on the economic data front. The consumer confidence index disappointed

strongly last week, as did U.S. retail sales earlier this week, and

housing starts yesterday.

From a technical perspective, pressure is building on oil prices as evidenced by the recent early summer highs and lower lows.

The

price of WTI broke out of its downward triangle yesterday by closing

below $65 support, setting the stage for a major bearish reversal. Below

$65, the outlook will remain bearish and the next supports to watch

will be the May low at $61.50 and the March low at $57.40.

The bearish outlook would be invalidated by a rebound above the recent high at $70.

Disclaimer:

This material has been created for information purposes only. All view

expressed in this document are my own and do not necessarily represent

the opinions of any entity.