Crude oil prices are slipping from their recent highest levels. Where could we see the next support located?
Oil prices fell sharply on Monday – extending last week’s decline – driven by potential progress in Ukraine-Russia talks.
India is considering taking advantage of Russia's discounted crude oil and other commodities offers by settling transactions through the rupee/ruble payment system. Meanwhile, on the eastern side, there is a rush to replace the Russian barrels in the west, but immediate availability is limited.
In addition, some fears that OPEC+ countries might not be able to easily increase supply remain, even though the UAE said last week that OPEC+ could double the output to the market (about 800,000 bpd) very quickly. However, this sounds very challenging since OPEC+ countries have already struggled to bring in 400,000 bbd.
On the Asian side, a slowdown in demand could have been seen as 17 million residents in Shenzhen, the technological centre of southern China, were locked down on Sunday after reports of epidemic outbreaks linked to the neighbouring territory of Hong Kong, where the Omicron strain seems to have spread. There are growing fears that other cities could follow suit to comply with the country's strict zero-COVID policy, adopted by the government of the People's Republic of China.
WTI Crude Oil (CLJ22) Futures (April contract, daily chart)
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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