WTI down 1.5% to $82.50 levels today
Price has slipped back below its key hourly moving averages as sellers are fighting for more control, as the back and forth action in oil continues over the past few weeks.
The high on Monday fell shy of testing the $85 level before retreating and we're seeing some added downside today in particular, with price slipping to $82.50 levels now.
While OPEC+ is set to meet later this week, there shouldn't be any change to output policy so it should not be much of a driving factor for oil prices in terms of event risk.
As such, the fundamental viewpoint still rests largely on demand-supply dynamics and the outlook continues to favour a tighter market going into next year.
Adding to that is recent news that China stockpiles are dwindling and state enterprises may step in to buy more inventories, even at elevated prices such as now.
But that aside, the technical perspective has been less than convincing. I'm still a big fan of oil but not with the recent back and forth action to say the least.
This has signs of exhaustion written all over it and after nine consecutive weeks of gains, oil finally posted a weekly loss last week. For now, the short-term support around $80.79 is helping to limit any major downside but relative to the gains since August, prices are still very much elevated with scope for a deeper pullback perhaps.
I'd be more comfortable adding to longs on any major correction towards $80 and just below that (preferably the latter) as long as the above fundamentals hold.
There are plenty of signs of greed, not least with BofA calling for $120 in their latest note, so perhaps we could see a flush before the next rally comes about.
